Pareto-Improving Unemployment Policies

Lingens, Jorg;Waelde, Klaus
(2005)

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  • Lingens, Jorg
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  • Waelde, Klaus
    Author
Abstract
We investigate how continental European unemployment can be reduced without reducing unemployment benefits and without reducing the net income of low-wage earners. Lower unemployment replacement rates reduce unemployment, the net wage and unemployment benefits. A lower tax on labour increases net wages and - for certain benefit-systems - unemployment benefits as well. Combining these two policies allows to reduce unemployment in countries with "net-Bismarck" and Beveridge systems without reducing net income of workers or the unemployed. Such a policy becomes self-financing under realistic parameter constellations when taxes are reduced only for low-income workers.
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Lingens, J., & Waelde, K. (2005). Pareto-Improving Unemployment Policies (ECON Working Papers 2005/33). https://hdl.handle.net/2078.5/39749