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ISSN 0924-7815Premium differentiation in the Unemployment Insurance system and the demand for labor (2000)
BibTeX
@MISC{Alessie00issn0924-7815premium,
author = {Rob Alessie and Hans Bloemen and Rob Alessie and Hans Bloemen},
title = {ISSN 0924-7815Premium differentiation in the Unemployment Insurance system and the demand for labor},
year = {2000}
}
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Abstract
In this study we investigate the effect of the introduction of premium differentiation (experience rating) in the Dutch Unemployment Insurance system on the demand for labor. We formulate a model of labor demand, based on the model by Bentolila and Bertola (1990), in which we distinguish two types of workers: the "young " and the "old". This distinction is made, as one of the major motives for opening the discussion around premium differentiation in the Netherlands is the wish to reduce the inflow of older workers into unemployment. In the model, labor adjustment costs (hiring and firing costs) are linear. The model allows for uncertainty in the business cycle. Premium differentiation is incorporated in the model as a rise in firing costs, accompanied by a decrease in unemployment insurance premium payments. Values for the model parameters are determined to quantify the effect of premium differentiation on the demand for labor in various sectors of the Dutch economy. We compute the effect of premium differentiation on the steady state level of labor demand. We also compute the effect of premium differentiation on the level of profits.
Keyphrases
premium differentiation issn 0924-7815premium differentiation unemployment insurance system labor demand firing cost dutch economy various sector experience rating business cycle dutch unemployment insurance system major motif labor adjustment cost unemployment insurance premium payment steady state level model parameter
