Unemployment Compensation and the Allocation of Labor in Developing Countries
| Autor: | Olivier Charlot, Franck Malherbet, Mustafa Ulus |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
Labour economics Layoff Sociology and Political Science media_common.quotation_subject Compensation (psychology) 05 social sciences 1. No poverty Developing country Incentive Payroll 8. Economic growth 0502 economics and business Unemployment Economics 050207 economics Finance 050205 econometrics media_common |
| Zdroj: | Journal of Public Economic Theory. 18:385-416 |
| ISSN: | 1097-3923 |
| DOI: | 10.1111/jpet.12144 |
| Popis: | This paper studies the effects of the introduction of unemployment compensation (UC) in countries characterized by pervasive informality. We provide a simple framework to analyze the impact of UC on the allocation of workers between formal and informal activities, as well as the allocation of workers between sectors featuring different incentives to go informal. We show that a reasonable amount of UC may reduce informality, while larger amounts of UC induce large disincentives to go formal because of the level of taxation involved. We also argue that the financing of UC should be part and parcel of a well- conceived UC system. We show that UC finance based on payroll taxes is likely to entail an excess level of informality resulting from cross-subsidies between heterogenous sectors. The introduction of a simple layoff tax meant to finance the UC system is then shown to reduce informality, hence highlighting how a well-designed financing scheme may be used as a supplementary instrument to curb informality. (This abstract was borrowed from another version of this item.) |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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