Institut für Volkswirtschaftslehre

                                       Fachgebiet Dienstleistungs- und Arbeitsmarktökonomik (520G)

Prof. Dr. Thomas Beißinger

>> Forschung >> Publikationen                                                                                                             english

Dynamic Wage Bargaining if Benefits are Tied to Individual Wages
(with Hartmut Egger)
Oxford Economic Papers, 56, 2004, 437-460


In dynamic wage bargaining models it is usually assumed that individual unemployment benefits are a fraction of the average wage level. In most countries, however, unemployment benefits are instead tied to the previous level of individually earned wages. We show how the analysis has to be modified if this fact is taken into account and compare our findings for the wage-setting curve with outcomes under other unemployment compensation schemes. From this comparison it becomes evident how the shape and position of the wage-setting curve depends on the specification of the unemployment benefit system.  We also demonstrate that a reduction of unemployment benefits of those who become unemployed after the bargaining period leads to higher equilibrium unemployment.