University of St.Gallen
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Flexicurity and Job Reallocation

Christian Keuschnigg & Thomas Davoine

abstract This paper develops a general equilibrium model with safe and risky jobs where unemployment is concentrated in a highly productive but volatile sector. Frictional unemployment arises in the process of job creation, firing and retraining for alternative employment. The paper derives an optimal welfare policy which combines the design of the tax schedule with three pillars of the `flexicurity' model. The optimal policy is characterized by (i) a progressive wage tax schedule; (ii) a wage subsidy to re-employed workers; (iii) unemployment insurance benefits; (iv) job protection to contain firing; and (v) active labor market policy to facilitate labor reallocation.
   
type discussion paper (Deutsch)
   
keywords
   
date of appearance 9-4-2010
page(s) 1-42
review not reviewed
   
citation Keuschnigg, C., & Davoine, T. (2010). Flexicurity and Job Reallocation.