Working Paper: CEPR ID: DP1086
Authors: Dennis J. Snower
Abstract: The paper examines the employment and unemployment implications of permitting unemployed people to use part of their unemployment benefits to provide employment vouchers to the firms that hire them. This opportunity to transfer unemployment benefits, `benefit transfers', would help replace the unemployment trap by providing an incentive to seek and provide jobs. The vouchers rise with people's unemployment durations and with the amount of training provided to them by the hiring firm. The policy would be costless to the government since the cost of the employment vouchers is set equal to the amount saved on unemployment benefits. It would not be inflationary since the long-term unemployed, on whom the vouchers are targeted, have little influence on wage setting.
Keywords: unemployment; employment vouchers; unemployment benefits; employment creation
JEL Codes: J23; J24; J31; J32; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Unemployment benefits (J65) | Employment incentives (J68) |
| Employment vouchers (J68) | Employment rates (J68) |
| Unemployment duration (J64) | Size of employment voucher (J68) |
| Size of employment voucher (J68) | Employment outcomes (J68) |
| BTP (R42) | Unemployment rates (J64) |
| BTP (R42) | Cost-neutral policy (H23) |
| BTP (R42) | Non-inflationary (E31) |