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Cover of: Bismarck versus Beveridge: Which Unemployment Compensation System Is More Prone to Labor Market Shocks?
Oliver Büsse, Thomas Beissinger

Bismarck versus Beveridge: Which Unemployment Compensation System Is More Prone to Labor Market Shocks?

Section: Articles
Volume 58 (2001) / Issue 1, pp. 78-102 (25)
Published 09.07.2018
DOI 10.1628/0015221022905768
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Summary
Based on a model with imperfectly competitive labor and product markets the real consequences of labor market shocks for economies with either an earnings-related or flat-rate unemployment compensation system are considered. A distinctive feature of the analysis is the comparison of both unemployment compensation systems in a twocountry setting. It is demonstrated that the performance of a system with earnings-related or flat-rate unemployment benefits depends on whether the labor market shock is provoked in the home country or originates from abroad. We also point out how our results extend to two-tier unemployment compensation systems which differ with respect to the relative importance of earnings-related and flat-rate benefits.