erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

How to Finance Unemployment Benefits in an Economy with Search Generated Equilibrium Unemployment

Pia Weiss (Institute for Economic Policy, Germany)

Abstract

The paper studies the effects of alternatives to finance the unemployment benefits on employment and wages in a model with search generated equilibrium unemployment. It is demonstrated that employment İstanbul Üniversitesi improved if the employers do not completely shift the tax to the consumer prices. If the firms completely pass the tax on to the consumers the employment effect of a change from a direct to an indirect taxation İstanbul Üniversitesi ambiguous. In addition, it is shown that shifting the burden of the contribution to the Social Security system from employers to employees may have negative employment effects if the benefits are not taxed. This effect vanishes if the benefits are taxed.

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