Incentive Contracts and E ¢ cient Unemployment Bene ts

  title={Incentive Contracts and E ¢ cient Unemployment Bene ts},
  author={Dominique Demougin},
  • Dominique Demougin
  • Published 2008
Several European countries have reformed their labor market institutions. Incentive e¤ects of unemployment bene…ts have been an important aspect of these reforms. We analyze this issue in a principalagent model, focusing on unemployment levels and labor productivity. In our model, a higher level of unemployment bene…ts improves the workers’position in wage bargaining, leading to stronger e¤ort incentives and higher output. However, it also reduces incentives for labor market participation… CONTINUE READING


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