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Training and search during unemployment

Spinnewijn, Johannes (2013) Training and search during unemployment. Journal of Public Economics, 99. pp. 49-65. ISSN 0047-2727

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Identification Number: 10.1016/j.jpubeco.2013.01.002

Abstract

Displaced workers often experience large losses in earnings even a long time after reemployment. Training programs during unemployment mitigate these losses but also affect the unemployed's willingness to search. This paper analyzes how mandatory training programs affect the optimal design of unemployment insurance and how the training intensity should evolve during the unemployment spell. The introduction of training reverses the optimal consumption dynamics during the unemployment spell and makes it optimal to incentivize the long-term unemployed to find employment despite the depreciation of their human capital. Targeting training programs towards the long-term unemployed, however, is optimal only if the fall in human capital upon displacement is small relative to the depreciation during unemployment.

Item Type: Article
Official URL: http://www.journals.elsevier.com/journal-of-public...
Additional Information: © 2013 Elsevier B.V.
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
L Education > LC Special aspects of education > LC5201 Education extension. Adult education. Continuing education
JEL classification: H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H21 - Efficiency; Optimal Taxation
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J62 - Job, Occupational, and Intergenerational Mobility
J - Labor and Demographic Economics > J6 - Mobility, Unemployment, and Vacancies > J64 - Unemployment: Models, Duration, Incidence, and Job Search
Sets: Departments > Economics
Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 15 Apr 2013 15:28
Last Modified: 20 Feb 2019 10:28
URI: http://eprints.lse.ac.uk/id/eprint/46859

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