The Effects of Productivity and Benefits on Unemployment: Breaking the Link

Alessio J. G. Brown , UNU-MERIT

In the standard macroecononomic search and matching model of the labour market, there is a tight link between the effects of (i) productivity on unemployment and (ii) unemployment benefits on unemployment. This tight link is at odds with the empirical literature. We present a two-sided model of the labour market search where the household and firm decisions are decomposed into job offers, job acceptances, firing and quits. In such a model unemployment benefits affect households’ behaviour directly, without having to run via the bargained wage. In line with the evidence productivity shocks may have quantitatively large effects on unemployment, while benefits only have moderate effects. Our analysis shows the importance of investigating the effects of policies on the households’ work incentives and the firms’ employment incentives within the search process.

About the speaker
Dr. Alessio J.G. Brown is Co-Director of POP at the United Nations University – Maastricht Economic and Social Research Institute on Innovation and Technology (UNU-MERIT) and Managing Editor of the Journal of Population Economics. Since 2014 Alessio J.G. Brown has been Director of Strategy and Research Management and Member of the Board at IZA. Before joining IZA Alessio J.G. Brown was Senior Consultant to the World Bank (2011-2013) and in various research and management positions at the Kiel Institute for the World Economy (2004-2014). Among others he was Executive Director of the Global Economic Symposium (GES, 2007-2014) and Head of Research Area (2008-2010). His main research interests are in the field of labour economics with a strong policy focus especially in the areas of employment incentives and policies, globalisation and welfare state reform as well as labour market models and dynamics. Alessio J.G. Brown studied Business Administration in Passau and Dublin. He successfully completed the Advanced Studies Program in Economic Policy Research at the Kiel Institute for the World Economy and received his doctorate (summa cum laude) for his dissertation "Incentive Models of the Labour Market" from Kiel University in October 2009.

Venue: Conference room

Date: 19 May 2016

Time: 12:30 - 13:30  CET