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Welfare differentials across French and US labor markets $e_A general equilibrium interpretation

Author

Listed:
  • Cohen, Daniel
Abstract
The paper computes lifetime welfare functions for French and American workers. For the vast majority of workers, we find that the lifetime discrepancy between the welfare of an employed and that of an unemployed worker appear to be quite similar in the two countries, corresponding to 9 monthly wages in the US and 13 monthly wages in France. From these and other values, we then calibrate standard parameters of equilibrium theories of unemployment such as hiring and firing costs and the quantitative incidence of unemployment benefit onto the equilibrium hiring rates. We find that the latter factor dominates the other. Because of the heterogeneity that we document on the labor market, we show, however, why reducing the level of French unemployment benefits to the level of American ones would dramatically reduce the welfare of the most vulnerable workers on the labor market.

Suggested Citation

  • Cohen, Daniel, 1999. "Welfare differentials across French and US labor markets $e_A general equilibrium interpretation," CEPREMAP Working Papers (Couverture Orange) 9904, CEPREMAP.
    • Handle: RePEc:cpm:cepmap:9904
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    File URL: http://www.cepremap.fr/depot/couv_orange/co9904.pdf
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    Citations

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    Cited by:

    1. Gilles Saint-Paul, 2004. "Why are European Countries Diverging in their Unemployment Experience?," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 49-68, Fall.
    2. Audra Bowlus & Jean-Marc Robin, 2010. "An International Comparison of Equalization Mobility and Lifetime Earnings Inequality: How Continental Europe Resembles North America," SciencePo Working papers Main hal-03473768, HAL.
    3. Gilles Saint-Paul, 2002. "The Political Economy of Employment Protection," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 672-701, June.
    4. Cahuc, Pierre & Malherbet, Franck, 2004. "Unemployment compensation finance and labor market rigidity," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 481-501, March.
    5. repec:adr:anecst:y:2008:i:90:p:07 is not listed on IDEAS
    6. Gilles Saint-Paul, 2000. "The "New Political Economy": Recent Books by Allen Drazen and by Torsten Persson and Guido Tabellini," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 915-925, December.

    More about this item

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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