Unemployment vs. mismatch of talents: reconsidering unemployment benefits

Marimon, Ramon and Zilibotti, Fabrizio (1999) Unemployment vs. mismatch of talents: reconsidering unemployment benefits The Economic Journal, 109, (455), pp. 266-291. (doi:10.1111/1468-0297.00432).


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We develop an equilibrium search-matching model with risk-neutral agents and two-sided ex-ante heterogeneity. Unemployment insurance has the standard effect of reducing employment, but also helps workers to get a suitable job. We show, through calibrations, how the mere difference on unemployment insurance, when countries experience a common skilled-biased technological shock, may result in differences in unemployment, productivity growth and wage inequality. These results are consistent with the contrasting performance of the labour market in Europe and the United States in the last twenty-five years. The model is used to address some political economy issues.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1111/1468-0297.00432
ISSNs: 0013-0133 (print)
ePrint ID: 33083
Date :
Date Event
Date Deposited: 21 Dec 2006
Last Modified: 16 Apr 2017 22:18
Further Information:Google Scholar
URI: http://eprints.soton.ac.uk/id/eprint/33083

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