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Publications
Publications
  • April 2002
  • Article
  • Journal of Labor Economics

The Determination of Unemployment Benefits

By: Rafael Di Tella and Robert J. MacCulloch
  • Format:Print
  • | Pages:31
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Abstract

While much empirical research exists on labor market consequences of unemployment benefits, there is remarkably little evidence on the forces determining benefits. We present a simple model where workers desire insurance against unemployment risk and benefits increase the unemployment rate. We then conduct one of the first empirical analyses of the determinants of the parameters of the benefit system. Using data for developed countries for 1971–89, controlling for year and country fixed effects and the government’s political color, we find evidence that the level of benefits falls when the unemployment rate is high. This is consistent with Wright’s tax effect.

Keywords

Unemployment; Compensation and Benefits

Citation

Di Tella, Rafael, and Robert J. MacCulloch. "The Determination of Unemployment Benefits." Journal of Labor Economics 20, no. 2 (April 2002): 404–34.
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About The Author

Rafael M. Di Tella

Business, Government and the International Economy
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More from the Authors
  • Does Social Media Cause Polarization? Evidence from Access to Twitter Echo Chambers during the 2019 Argentine Presidential Debate By: Rafael Di Tella, Ramiro H. Gálvez and Ernesto Schargrodsky
  • The 2012 Spanish Labor Reform: Lifting All Boats or Levelling Down? By: Vincent Pons, Rafael Di Tella, Santiago Botella and Elena Corsi
  • The Trouble with TCE By: Vincent Pons, Rafael Di Tella and Galit Goldstein
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