Welfare measurement, involuntary unemployment and heterogeneity
2010 (English)In: The Review of Income and Wealth, ISSN 0034-6586, E-ISSN 1475-4991, Vol. 56, no 3, 559-571 p.Article in journal (Refereed) Published
This paper concerns welfare measurement in an economy with union wage setting, where the equilibrium is characterized by unemployment. Contrary to results derived in the first best, the current value Hamiltonian is not an exact welfare measure in an economy with unemployment. Instead, the welfare measure also depends on “employment effect,” which are caused by the discrepancy between supply and demand in the labor market. In addition, since unemployment gives rise to heterogeneity, distributional effects will also characterize the welfare measure.
Place, publisher, year, edition, pages
Wiley , 2010. Vol. 56, no 3, 559-571 p.
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-35651DOI: 10.1111/j.1475-4991.2010.00402.xISI: 000281000200006OAI: oai:DiVA.org:umu-35651DiVA: diva2:345870