تامین مالی جبران خسارت بیکاری و استحکام بازار کار
|کد مقاله||سال انتشار||مقاله انگلیسی||ترجمه فارسی||تعداد کلمات|
|17503||2004||21 صفحه PDF||سفارش دهید||8826 کلمه|
Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of Public Economics, Volume 88, Issues 3–4, March 2004, Pages 481–501
The systematic use of experience rating is an original feature of the U.S. unemployment benefits system. At first glance, experience rating does not appear to be a desirable choice for a lot of European labor markets, which are characterized by high firing costs. We provide a simple matching model of a rigid labor market that includes firing costs, temporary jobs and a minimum wage in order to analyze this issue. Our analysis leads us to argue that experience rating is likely to reduce unemployment and improve the welfare of low-skilled workers in France, and more generally for low-skilled workers in a typical, rigid Continental European labor market.
The systematic use of experience rating is an original feature of the U.S. unemployment benefits system. In most states, unemployment benefits are financed by taxing firms in proportion to their separations. Experience rating is a way to require employers to contribute to the payment of unemployment benefits they create through their firing decisions. It is striking that experience rating is absent from the unemployment compensation systems of other OECD countries, where benefits are usually financed by payroll taxes paid by employers or employees, and by government contributions (Holmlund, 1998). The absence of experience rating in the other OECD countries leads us to ask the following questions: is experience rating only adapted to the U.S. labor market? Would it be suitable for other countries? Indeed, the U.S. labor market is special, in that it is always considered as being dramatically flexible: there is no job protection (OECD, 1999) and the minimum wage is low with respect to many other OECD countries (OECD, 1998). Thus, we may ask if experience rating is only suitable in a very flexible labor market, and undesirable in a labor market that faces strong job protection and high minimum wages? A lot of research has been devoted to understanding the consequence that experience rating has on unemployment and welfare (see Holmlund, 1998, for a survey). Feldstein (1976) is among the first to offer a theoretical analysis of experience rating. Feldstein presents a model of temporary layoffs, which are frequent in the U.S. economy. For this model, he considers the behavior of a firm, with an exogenous number of employees that is facing demand shocks. He argues that unemployment insurance subsidies cause layoffs when they would otherwise have not occurred, and magnifies the size of the layoffs that do occur. Feldstein’s contribution, extended by Burdett and Wright (1989) and Marceau (1993), examines the consequences of experience rating on temporary layoffs. It is assumed that a pool of workers is attached to the firm, and that they do not find jobs elsewhere when unemployed. As Feldstein has stressed, this analysis is likely to be relevant in the manufacturing sector in the U.S. Temporary layoffs are scarce, however, in most European labor markets. Accordingly, some papers have looked at the consequences of experience rating in models that allow workers to be mobile across firms. Within this framework, experience rating has the same consequences as a combination of an increase in firing costs and a decrease in payroll taxes. As shown by Mortensen and Pissarides (1994), Millard and Mortensen (1997) and Mortensen and Pissarides, 1999a and Mortensen and Pissarides, 1999b, an increase in firing costs has an ambiguous impact on unemployment: it reduces both job creation and job destruction. The decrease in the payroll tax is usually beneficial to employment. Millard and Mortensen (1997) find that increasing the experience rating decreases unemployment for reasonable values of the parameters in a matching model with endogenous job destruction and wages that are bargained at the firm level. As Millard and Mortensen do not explicitly introduce a balanced budget for the unemployment benefit system, the increase in the experience rating has exactly the same effect on unemployment as a rise in firing costs. In fact, it can be argued that introducing a balanced budget constraint would magnify the decrease in unemployment due to the experience rating, since the payroll tax should be reduced by the increase in the experience rating. From this point of view, Albrecht and Vroman’s (1999) contribution is of particular interest, because they explicitly introduce a balanced budget constraint for the unemployment benefits system. They examine the consequences of experience rating in an efficiency wage model where workers’ heterogeneity gives rise to imperfect monitoring and endogenous layoffs. They compare two self-financing unemployment compensation systems: one in which benefits are financed by a proportional payroll tax, and another where firms are taxed in proportion to their layoffs. They find that experience rating is favorable to employment, wages and production for any level of unemployment benefits. That is because experience rating, which increases separation costs, induces firms to pay higher wages in order to avoid layoffs. Thus, Albrecht and Vroman are able to show that higher wages, lower unemployment and higher production are obtained with experience rating for relevant values of the parameters. Generally, empirical analysis of experience rating supports Feldstein’s analysis. Topel (1983) estimates that unemployment insurance subsidies due to payroll taxes account for more than a quarter of layoffs in his data set. The series of papers by Anderson and Meyer, 1993, Anderson and Meyer, 1994 and Anderson and Meyer, 2000 shed light on the effects of experience rating in a broad variety of cases in the United States. The paper by Anderson and Meyer (2000) is of particular interest because the authors provide a detailed analysis of the 1984 Washington state legislation switch from a payroll tax system to an experience-rated system. This natural experiment provides good evidence on the effects of experience rating compared to a payroll tax system, and thus may help elaborate a potential reform of the unemployment benefits scheme in Continental Europe. Overall, the contributions that analyze the consequences of experience rating in equilibrium unemployment models conclude that it is a good system. Nevertheless, it should be noted that these contributions do not analyze how experience rating interacts with other labor market institutions. The aim of our paper is to tackle this issue. From this perspective, we use a simple equilibrium search and matching model, based on Mortensen and Pissarides, 1994 and Mortensen and Pissarides, 1999a framework, which takes into account important rigidities of European labor markets. More precisely, following Blanchard and Landier (2000) and Cahuc and Postel-Vinay (2002), we take into account job protection by introducing both firing costs and temporary jobs, which play a very important role in European countries (see OECD, 1999). We also introduce a minimum wage. Theoretical analysis shows that the combination of minimum wage, temporary jobs and firing costs can give rise to a form of labor market regulations where experience rating is worthwhile. Moreover, the calibration of our model leads us to argue that experience rating is likely to reduce unemployment and improve labor market efficiency for low-skilled workers in a typical, rigid Continental European labor market. The paper is organized as follows. Section 2 presents the model, which will allow us to mimic both flexible and rigid labor markets. Section 3 is devoted to the analysis of the consequences of experience rating in a flexible, American-like, labor market, which will be used as a benchmark for understanding how labor market rigidities influence the efficiency of experience rating. Section 4 sheds some light on the influence of labor market rigidities and tries to assess the desirability of experience rating in the French labor market—a market that is well-known for its rigidity. Finally, Section 5 provides some concluding comments.
نتیجه گیری انگلیسی
In this paper, we have used a rigid labor market model with firing costs, temporary jobs and a minimum wage. This model led us to argue that experience rating is likely to reduce unemployment and to improve labor market efficiency for low-skilled workers in France, and more generally, for low-skilled workers in a typical, rigid Continental European labor market. These results suggest that the combination of minimum wages, temporary jobs and firing costs found throughout Continental Europe gives rise to a form of labor market regulations where experience rating could be worthwhile. Obviously, our model has some limitations, which future work should go beyond. First, workers’ heterogeneity was not taken into account. In fact, experience rating is likely to induce firms to substitute workers with short expected unemployment durations by those with long expected unemployment durations. That is because the cost of the former is lower in case of a separation. From this point of view, experience rating could be detrimental for very low-skilled workers, whose unemployment spell is long. It is important to take this feature into account to evaluate the robustness of our results. Second, ex ante firms’ heterogeneity was neglected. The introduction of experience rating induced an increase in the tax burden in sectors with high labor turnover, and a decrease in the others. It is important to evaluate the consequences of such redistributive effects on the employment level of each sector to obtain a complete picture of the effects of experience rating (Deere, 1991). Third, we limited the analysis to the segment of the labor market with a binding minimum wage when we focused on the European situation. It would be worth taking into account the interactions between this segment and others in which wages are bargained by social partners. Fourth, our model did not account for the macroeconomic environment. Analyzing the incidence of experience rating on welfare and unemployment when the economy is subjected to both idiosyncratic and macroeconomic shocks is on our research agenda.