binding policy commitment before nominal wages are set, excessive inflation may result due to a credibility problem. This is … may exist in public unemployment insurance policy. I study a model inwhich trade unions, who set wages, interact with a … motives. If the policy maker cannot commit to future policies, and wages are relatively rigid, taxes and benefits are …

method usesreadily available aggregate data on marginal distributions ofunemployment durations as well as wages and benefit …

low wages and too high output prices. Our results support this hypothesis of a `risk-compensated price-mechanism'. We also … find that the downward pressure on wages is exacerbated by an over-supply of labor by consumers. These observationscan …