RT info:eu-repo/semantics/article
T1 Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect
A1 Martín Román, Ángel Luis
K1 Labour force participation
K1 Business cycle
K1 Unemployment
K1 Added-worker effect
K1 Discouraged-worker effect
K1 Unemployment benefit
K1 53 Ciencias Económicas
AB This paper identifies and analyses a new effect related to the cyclical behaviour of labour supply: the Entitled-Worker Effect (EWE). This effect is different from the well-known Added-Worker Effect (AWE) and Discouraged-Worker Effect (DWE). The EWE is a consequence of one of the most important labour institutions: the unemployment benefit (UB). We develop a model with uncertainty about the results of the job-seeking and transaction costs linked to such a search process, showing that a kind of moral hazard appears. This creates new incentives for workers and produces an additional counter-cyclical pressure on aggregate labour supply, but with a different foundation from that of the AWE. We present empirical evidence supporting the EWE for the Spanish case. As a forward-looking conclusion, policymakers should rethink their political actions in the future as unemployment might be overstated, particularly in those countries with generous UB systems.
PB Elsevier
SN 0264-9993
YR 2022
FD 2022
LK https://uvadoc.uva.es/handle/10324/58639
UL https://uvadoc.uva.es/handle/10324/58639
LA eng
NO Economic Modelling, 2022, vol, 110, p. 105812
NO Producción Científica
DS UVaDOC
RD 11-jul-2024