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Cross-country differences in unemployment : fiscal policy, unions, and household preferences in general equilibrium

Brecht Boone (UGent) and Freddy Heylen (UGent)
Author
Organization
Abstract
We develop a five period overlapping generations model with individuals who differ by ability and with an imperfect labour market (union wage setting) for the individuals of lower ability. The model explains human capital formation, hours worked and unemployment within one coherent framework. Its predictions match the differences in the unemployment rate across 12 OECD countries remarkably well. A Shapley decomposition of these differences reveals an almost equal role for fiscal policy variables and union preferences. As to fiscal policy, differences in unemployment benefits play a much more important role than tax differences. Differences in households’ taste for leisure are unimportant.
Keywords
skill-type heterogeneity, union preferences, wage setting, overlapping generations, Shapley decomposition

Citation

Please use this url to cite or link to this publication:

Chicago
Boone, Brecht, and Freddy Heylen. 2018. “Cross-country Differences in Unemployment : Fiscal Policy, Unions, and Household Preferences in General Equilibrium.” Scandinavian Journal of Economics .
APA
Boone, Brecht, & Heylen, F. (2018). Cross-country differences in unemployment : fiscal policy, unions, and household preferences in general equilibrium. SCANDINAVIAN JOURNAL OF ECONOMICS .
Vancouver
1.
Boone B, Heylen F. Cross-country differences in unemployment : fiscal policy, unions, and household preferences in general equilibrium. SCANDINAVIAN JOURNAL OF ECONOMICS . Wiley; 2018;
MLA
Boone, Brecht, and Freddy Heylen. “Cross-country Differences in Unemployment : Fiscal Policy, Unions, and Household Preferences in General Equilibrium.” SCANDINAVIAN JOURNAL OF ECONOMICS (2018): n. pag. Print.
@article{8567061,
  abstract     = {We develop a five period overlapping generations model with individuals who differ by ability and with an imperfect labour market (union wage setting) for the individuals of lower ability. The model explains human capital formation, hours
worked and unemployment within one coherent framework. Its predictions match the differences in the unemployment rate across 12 OECD countries remarkably well. A Shapley decomposition of these differences reveals an almost equal role
for fiscal policy variables and union preferences. As to fiscal policy, differences in unemployment benefits play a much more important role than tax differences. Differences in households{\textquoteright} taste for leisure are unimportant.},
  author       = {Boone, Brecht and Heylen, Freddy},
  issn         = {0347-0520},
  journal      = {SCANDINAVIAN JOURNAL OF ECONOMICS },
  keyword      = {skill-type heterogeneity,union preferences,wage setting,overlapping generations,Shapley decomposition},
  language     = {eng},
  publisher    = {Wiley},
  title        = {Cross-country differences in unemployment : fiscal policy, unions, and household preferences in general equilibrium},
  url          = {http://dx.doi.org/10.1111/sjoe.12302},
  year         = {2018},
}

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