Bismarck versus Beveridge: Which Unemployment Compensation System is more Prone to Labor market Shocks?
- Publication Type
- Journal contribution (peer reviewed)
- Authors
- Beissinger, Thomas and Büsse, Oliver
- Year of publication
- 2001
- Published in
- FinanzArchiv
- Band/Volume
- 58/1
- Page (from - to)
- 78-102
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 two-country 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.