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The last three recessions in the United States were followed by jobless recoveries: while labor productivity recovered, unemployment remained high. In this paper, we show that countercyclical unemployment benefit extensions lead to jobless recoveries. We augment the standard Mortensen-Pissarides...
Persistent link: https://www.econbiz.de/10013055001
Persistent link: https://www.econbiz.de/10010390367
Countercyclical unemployment benefit extensions in the United States act as a propagation mechanism, contributing to both the high persistence of unemployment and its weak correlation with productivity. We show this by modifying an otherwise standard frictional model of the labor market to...
Persistent link: https://www.econbiz.de/10012868824
Persistent link: https://www.econbiz.de/10012166930
We investigate the optimal response of unemployment insurance to economic shocks, both with and without commitment. The optimal policy with commitment follows a modified Baily-Chetty formula that accounts for job search responses to future UI benefit changes. As a result, the optimal policy with...
Persistent link: https://www.econbiz.de/10012431134
Persistent link: https://www.econbiz.de/10012800493
Countercyclical unemployment benefit extensions in the United States act as a propagation mechanism, contributing to both the high persistence of unemployment and its weak correlation with productivity. We show this by modifying an otherwise standard frictional model of the labor market to...
Persistent link: https://www.econbiz.de/10012019263
Persistent link: https://www.econbiz.de/10012182711
Equilibrium labor market theory suggests that unemployment benefit extensions affect unemployment by impacting both job search decisions by the unemployed and job creation decisions by employers. The existing empirical literature focused on the former effect only. We develop a new methodology...
Persistent link: https://www.econbiz.de/10012905171
Equilibrium labor market theory suggests that unemployment benefit extensions affect unemployment by impacting both job search decisions by the unemployed and job creation decisions by employers. The existing empirical literature focused on the former effect only. We develop a new methodology...
Persistent link: https://www.econbiz.de/10013074813