Title: The Effects of Unemployment Compensation in General Equilibrium with Search Unemployment
Abstract:It is shown that when the effects of an increase in unemployment subsidies are studied in a equilibrium framework, unemployment increases far less than in a partial-partial model. In fact, the result ...It is shown that when the effects of an increase in unemployment subsidies are studied in a equilibrium framework, unemployment increases far less than in a partial-partial model. In fact, the result may very well be a decrease in unemployment if the general equilibrium forces are strong enough. In the model used in this paper, an increase in unemployment compensation unambiguously decreases the rate of unemployment. Copyright 1990 by The editors of the Scandinavian Journal of Economics.Read More