The hiring subsidy cum firing tax in a search model of unemployment

B.J. Heijdra, J.E. Ligthart

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4 Citations (Scopus)

Abstract

We study the macroeconomic and welfare effects of a tax-subsidy scheme on labour in a model with search unemployment. In a second-best world welfare increases if unemployment is inefficiently high or if there are pre-existing fiscal distortions. (C) 2002 Elsevier Science B.V. All rights reserved.

Original languageEnglish
Article numberPII S0165-1765(01)00577-8
Pages (from-to)97-108
Number of pages12
JournalEconomics Letters
Volume75
Issue number1
Publication statusPublished - Mar-2002

Keywords

  • hiring subsidy
  • firing tax
  • job search
  • equilibrium unemployment
  • LABOR-MARKET SEARCH
  • REAL BUSINESS-CYCLE

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