Staying on the Dole



Figure 3: Career Diagram without STU

LTU                         Employed

0 = λτ = λ), implying that the sign of the derivative equals the sign of

b(1 - θ)λ(δτ + δT) - s(1 - b).

A degenerate case may occur if s is very high and b is low. Then, social benefits are so generously
granted compared to unemployment benefits that increasing eligibility for unemployment ben-
efits entails the dominating negative effect of delaying waiting time until eligibility for welfare
assistance. Of course, without welfare assistance (s = 0) this channel is always closed.

LTU is independent from retraining costs and human capital degradation because the choice
is between being never and always unemployed (∂h
B/∂d = ∂hB/∂c = 0). The other derivatives
are in line with the case discussed in the main text: LTU increases for higher unemployment
benefits, higher welfare assistance, higher taxes rates, and higher labor market frictions.

24



More intriguing information

1. Can a Robot Hear Music? Can a Robot Dance? Can a Robot Tell What it Knows or Intends to Do? Can it Feel Pride or Shame in Company?
2. Learning-by-Exporting? Firm-Level Evidence for UK Manufacturing and Services Sectors
3. Migrating Football Players, Transfer Fees and Migration Controls
4. The name is absent
5. The Role of area-yield crop insurance program face to the Mid-term Review of Common Agricultural Policy
6. Credit Market Competition and Capital Regulation
7. The name is absent
8. Naïve Bayes vs. Decision Trees vs. Neural Networks in the Classification of Training Web Pages
9. The name is absent
10. AMINO ACIDS SEQUENCE ANALYSIS ON COLLAGEN