Replication data for: Optimal Labor-Market Policy in Recessions
Principal Investigator(s): View help for Principal Investigator(s) Philip Jung; Keith Kuester
Version: View help for Version V1
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Project Citation:
Jung, Philip, and Kuester, Keith. Replication data for: Optimal Labor-Market Policy in Recessions. Nashville, TN: American Economic Association [publisher], 2015. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114061V1
Project Description
Summary:
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Within a search and matching model with risk-averse workers, endogenous hiring and separation, and unobservable search effort, we show how to decentralize the constrained-efficient allocation by a combination of a production tax and three labor-market policy instruments: vacancy subsidies, layoff taxes, and unemployment benefits. We derive analytical expressions for the optimal mix of these over the business cycle. Calibrating the model to the US economy under the assumption that wages are rigid, we find that hiring subsidies and layoff taxes should rise considerably and persistently in recessions. The optimal variation in unemployment benefits, in contrast, is quantitatively small and short-lived. (JEL E24, E32, J24, J63, J64, J65)
Scope of Project
JEL Classification:
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E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E32 Business Fluctuations; Cycles
J24 Human Capital; Skills; Occupational Choice; Labor Productivity
J63 Labor Turnover; Vacancies; Layoffs
J64 Unemployment: Models, Duration, Incidence, and Job Search
J65 Unemployment Insurance; Severance Pay; Plant Closings
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
E32 Business Fluctuations; Cycles
J24 Human Capital; Skills; Occupational Choice; Labor Productivity
J63 Labor Turnover; Vacancies; Layoffs
J64 Unemployment: Models, Duration, Incidence, and Job Search
J65 Unemployment Insurance; Severance Pay; Plant Closings
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