On the Extent of Re-Entitlement Effects in Unemployment Compensation

Javier Ortega and Laurence Rioux ()
Additional contact information
Laurence Rioux: CREST-INSEE

No 2807, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A dynamic labor matching economy is presented, in which the unemployed are either entitled to unemployment insurance (UI) or unemployment assistance (UA), and the employees are either eligible for UI or UA upon future separations. Eligibility for UI requires a minimum duration of contributions and UI benefits are then paid for a limited duration. Workers are risk-averse and wages are determined in a bilateral Nash bargain. As eligibility for UI does not automatically follow from employment, the two types of unemployed workers have different threat points, which delivers equilibrium wage dispersion. Most of the variables and parameters of the model are estimated using the French sample of the European Community Household Panel (1994-2000). We show that extending the UI entitlement improves the situation of all groups of workers and slightly lowers unemployment, while raising UI benefits harms the unemployed on assistance and raises unemployment. Easier eligibility for UI also improves the situation of all groups of workers and favours relatively more the least well-off than longer entitlement. The re-entitlement effect in France lowers by 10% the rise in the wage and by 13% the rise in unemployment following a 10% increase in benefit levels.

Keywords: unemployment compensation; matching; re-entitlement effects (search for similar items in EconPapers)
JEL-codes: J41 J65 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2007-05
New Economics Papers: this item is included in nep-ias and nep-lab
References: Add references at CitEc
Citations:

Published - revised version published in: Labour Economics, 2010, 17(2), 368-382

Downloads: (external link)
https://docs.iza.org/dp2807.pdf (application/pdf)

Related works:
Journal Article: On the extent of re-entitlement effects in unemployment compensation (2010)
Working Paper: On the Extent of Re-Entitlement Effects in Unemployment Compensation (2008)
Working Paper: On the extent of re-entitlement effects in unemployment compensation (2008)
Working Paper: On the Extent of Re-Entitlement Effects in Unemployment Compensation (2006)
Working Paper: On the Extent of Re-entitlement Effects in Unemployment Compensation" (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp2807

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().