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Are early educational choices affected by unemployment benefits? [electronic resource] : new theory / Paul Frijters and Micheal A. Shields
Bib ID 6100706
Format BookBook, OnlineOnline
Author
Frijters, Paul
 
Online Access
Online Versions
Description Brisbane, Qld. : School of Economics, University of Queensland, 2010 
Series

Discussion paper (University of Queensland. School of Economics : Online) ; 447. 1833-1068

PANDORA electronic collection.

Technical Details

Mode of access: Online. Address as at 17/09/2012: http://www.uq.edu.au/economics/447-are-early-educational-choices-affected-by-unemployment-benefits-new-theory 

System requirements: Adobe Acrobat reader to read PDF file. 

Summary

In this paper we contribute to the recent literature that has investigated the potential economic advantages of unemployment benefits, by developing a model where young individuals in education have to irreversibly choose a degree of specialisation positively related to future unemployment risk, market wages for different types of specialisation have to compensate risk-averse individuals for these risks. Unemployment benefits affect the incentives for specialisation and thereby the long-run composition of the workforce, the wage structure, and output. I address this issue in OLG search models with risk-aversion, talent heterogeneity, endogenous specialisation distributions, and competitive wage formation. The main results are that 1) higher unemployment benefits are related to higher mean specialisation and at low levels raise efficiency and welfare; 2) even though wages compensate for risks, unemployment risk and individual wages are generically negatively related when there is talent heterogeneity; 3) the composition of the workforce changes slowly with changing incentives, leading to long lags between welfare system changes and average outcomes (unemployment and output) and lead to longer lasting effects of shocks in regions with higher unemployment benefits.

Notes

Title from title screen (viewed on Sept. 17, 2012)

"September 6, 2010".

Includes bibliographical references (p. 27-30)

Text and graphics.

Selected for archiving

Subjects Unemployment insurance -- Econometric models.  |  Employment (Economic theory) -- Econometric models.  |  Australian
Other authors/contributors Shields, Michael A  |  University of Queensland. School of Economics

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