Reference : A Coalitional Theory of Unemployment Insurance and Employment Protection
Scientific journals : Article
Business & economic sciences : Economic systems & public economics
http://hdl.handle.net/10993/44407
A Coalitional Theory of Unemployment Insurance and Employment Protection
English
Anesi, Vincent mailto [University of Luxembourg > > >]
De Donder, Philippe mailto []
2013
Economic Theory
Springer
52
941-977
Yes (verified by ORBilu)
International
0938-2259
1432-0479
Heidelberg
Germany
[en] This paper examines the role of coalition formation in the empirically observed negative correlation between employment protection and unemployment benefit. We study an economy composed of four groups of agents (capitalists, unemployed people, low- and high-skilled workers), each one represented by a politician. Politicians first form political parties and then compete in a winner-takes-all election by simultaneously proposing policy bundles composed of an employment protection level and an unemployment benefit. We first show that, in the absence of parties (i.e., in a citizen-candidate model), low-skilled workers are decisive and support a maximum employment protection level together with some unemployment benefit. We then obtain that, under some conditions, allowing for party formation results in all policy equilibria belonging to the Pareto set of the coalition formed by high-skilled workers together with unemployed people. Policies in this Pareto set exhibit a negative correlation between employment protection and unemployment benefit.
http://hdl.handle.net/10993/44407
https://link.springer.com/article/10.1007/s00199-011-0671-1

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