Time limits on welfare use under involuntary unemployment

Christian Holzner, Volker Meier, Martin Werding

The impacts of introducing or tightening time limits on welfare use are studied in an efficiency wage model. Those losing access to regular benefits receive some smaller benefit, which can be interpreted as food stamps. Stricter time limits raise both employment and profits and generally reduce the tax rate. The impact on the net wage is ambiguous. Changes of utility levels of employed workers and recipients of regular social assistance have the same sign as the variation in the net wage. The utility differential between social assistance recipients and food stamp participants shrinks.

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Year of publication:	June 2004
Authors:	Holzner, Christian ; Meier, Volker ; Werding, Martin
Publisher:	München : CESifo, Center for Economic Studies & Ifo Institute
Subject:	welfare benefits \| time limits \| efficiency wages \| Öffentliche Sozialleistungen \| Social security benefits \| Dauer \| Duration \| Effizienzlohn \| Efficiency wages \| Theorie \| Theory \| Theorie der unfreiwilligen Arbeitslosigkeit \| Theory of involuntary unemployment \| Sozialhilfe