Blumḳin, Tomer; Danziger, Leif; Yashiv, Eran - 2016 - Revised Version: May 1, 2016
This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a...