Article (Scientific journals)
A Coalitional Theory of Unemployment Insurance and Employment Protection
Anesi, Vincent; De Donder, Philippe
2013In Economic Theory, 52, p. 941-977
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Abstract :
[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.
Disciplines :
Economic systems & public economics
Author, co-author :
Anesi, Vincent  ;  University of Luxembourg
De Donder, Philippe
External co-authors :
yes
Language :
English
Title :
A Coalitional Theory of Unemployment Insurance and Employment Protection
Publication date :
2013
Journal title :
Economic Theory
ISSN :
1432-0479
Publisher :
Springer, Heidelberg, Germany
Volume :
52
Pages :
941-977
Peer reviewed :
Peer Reviewed verified by ORBi
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