Publication Type
Journal Article
Version
publishedVersion
Publication Date
8-1983
Abstract
The influence of unemployment insurance on wage and layoff behavior is analyzed in the context of optimal labor contracts. Responses of contract terms to changes in economic parameters are shown to depend in general on the nature of the initial contract, the degree of workers' risk aversion, and the resolution of bargaining conflict. Layoffs are not necessarily reduced by an increase in experience rating or a reduction in the UI benefit. Product demand fluctuations tend to induce procyclical employment fluctuations but not wage fluctuation. An implication of optimal contracts with private insurance suggests a reason for government intervention in UI provision. © 1983.
Discipline
Labor Economics
Research Areas
Applied Microeconomics
Publication
Journal of Public Economics
Volume
21
Issue
3
First Page
325
Last Page
357
ISSN
0047-2727
Identifier
10.1016/0047-2727(83)90002-6
Citation
BURDETT, Kenneth and HOOL, Bryce.
Layoffs, Wages and Unemployment Insurance. (1983). Journal of Public Economics. 21, (3), 325-357.
Available at: https://ink.library.smu.edu.sg/soe_research/1769
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/0047-2727(83)90002-6