Workfare, monitoring, and efficiency wages

Holzner, Christian; Meier, Volker; Werding, Martin

doi:10.1016/j.jmacro.2009.05.002

Cited by 7 publications

(4 citation statements)

References 19 publications

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“…Subsequent studies in the literature have generally adopted this approach. Based on this utility function, Strand (1987) examined the effects of heterogeneous workers on the labor market; Oi (1990) modeled unemployment in a dual labor market; Strand (1991) investigated how firm-specific shocks and moral hazard affect unemployment and wages; Meier (2002), Holzner et al(2010) examined the effect of work requirements for welfare recipients on the wage rate; Boeria and Jimeno (2005) analyzed employment protections in the labor market; Ose (2005) explored the relationship among working conditions, compensation and absenteeism. Skott (2006) examined over-education and wage inequality; Sparks (1986) highlighted the role of imperfect monitoring and dismissal threats in underpinning real wage rigidity; and Zenou & Smith (1995) and Zenou (2006) studied the worker's decision to live in central business district or urban-fringe; Phelps (1994) and Brecher et al (2010) generalized this model by incorporating asset accumulation and modifying the no-shirking condition.…”

Section: Literature Reviewmentioning

confidence: 99%

The Shapiro-Stiglitz Model with Non-constant Marginal Utility

2017

Open Economics

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Abstract:The Shapiro-Stiglitz model plays an important role in the employment theory. Woodford pointed out the theoretic limitation of the linear worker's utility function in that model. He questioned the model's implication of the secular decline in the unemployment rate when such rate was in fact trendless. He proposed to resolve this by allowing diminishing marginal utility of income. In this paper, the ShapiroStiglitz model is generalized using a nonlinear utility function implicit in the Stiglitz Efficiency-wage paper, thus linking these two well-known models. The nonlinear utility function in this generalized model not only allows for diminishing marginal utility of income but also allows for the analysis of parameters representing various factors affecting the secular unemployment rate. In particular, we can specify the condition under which the diminishing marginal utility can cause such rate to be trendless. JEL Classifications: E24; J31; J64

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Section: Literature Reviewmentioning

confidence: 99%

The Shapiro-Stiglitz Model with Non-constant Marginal Utility

2017

Open Economics

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“…We limit our focus to the interface between involuntary unemployment and redistribution, where the literature is limited. Optimal redistribution analysis has been extended to settings with fictional/search unemployment by Boone and Bovenberg (2002), Boadway, Cuff, and Marceau (2003), and Hungerbühler et al (2006), and to efficiency‐wage unemployment by Boadway, Cuff, and Marceau (2003) and Holzner, Meier, and Werding (2010).…”

Section: Recent Innovationsmentioning

confidence: 99%

Viewpoint: Innovations in the theory and practice of redistribution policy

Boadway

2011

Canadian J of Economics

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We present a survey of key results from second-best optimal redistribution theory and their implications for tax-transfer policy. The core results include the CorlettHague theorem, the Deaton conditions, the production-efficiency theorem, the AtkinsonStiglitz theorem, and the Mirrlees-Saez characterization of the optimal non-linear income tax system. These have been augmented in recent years by optimal participation tax rates, the implications of involuntary unemployment, the use of unconventional instruments, such as minimum wages, in-kind transfer, and workfare, and the optimal taxation of capital income and bequests. JEL classification: H21, H23.Innovations en théorie de la redistribution et leurs implications pour la politiqueéconomique. L'auteur présente un survol des principaux résultats théoriques de la redistribution optimale de second-ordre, et de leurs implications pour les politiques d'imposition et de transferts. Les résultats fondamentaux incluent le théorème de Corlett-Hague, les conditions de Deaton, les théorèmes d'efficacité en production, le théorème d'Atkinson-Stiglitz, ainsi que la caractérisation du système optimal d'imposition non-linéaire du revenuà la Mirrlees-Saez. Ces derniers résultats ontété enrichis, au cours des dernières années, par certains autres portant sur les taux d'imposition découlant des allocations conditionnelles, les implications du chômage involontaire, l'usage d'instruments non-conventionnels tels que le salaire minimum, les transferts en nature, le workfare, ainsi que l'imposition optimale des revenus du capital et des legs. Ces résultats sont exposés et leurs implications pour les politiques d'imposition et de transferts sont discutées.

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“… A wage effect is also identified by Holzner et al . () in an efficiency wage model. They show that workfare lessens the non‐shirking condition, which in turn leads to a downward shift in the wage curve. …”

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confidence: 99%

The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market

Andersen

Svarer

2013

Economica

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Workfare policies are often introduced in labour market policies to improve the trade-off between incentives and insurance as an alternative to benefit reductions. Most of the debate on such policies has focussed on the direct effect of those participating in the scheme, and in particular the possible locking-in effect reducing job search. In a general equilibrium search framework, we show that the effects of workfare policies critically depend on the response of those not in the programme when they take into account that workfare is a condition for remaining eligible for unemployment benefits. This implies that unemployed not yet in workfare may search more for regular jobs, and employed may accept lower wages since the outside option becomes less attractive. Introduction of workfare policies into an unemployment insurance scheme is shown to contribute to a reduction in both open and total unemployment. It is also shown that the direct search effects of workfare policies are a poor indicator of the overall effect workfare policies have on labour market policies. Terms of use: Documents inJEL Code: J68.

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Workfare, monitoring, and efficiency wages

Cited by 7 publications

References 19 publications

The Shapiro-Stiglitz Model with Non-constant Marginal Utility

The Shapiro-Stiglitz Model with Non-constant Marginal Utility

Viewpoint: Innovations in the theory and practice of redistribution policy

The Role of Workfare in Striking a Balance between Incentives and Insurance in the Labour Market

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