Table 1
Endogenous Variables in the Model.
|
Description |
Variable |
|
Wages |
w |
|
Vacancies |
V |
|
Inflow of vacancies |
VI |
|
Total unemployment |
U |
|
Total employment |
E |
|
Short-term unemployment |
US |
|
Monthly short-term unemployment |
Uk, k= 1,..., 12 |
|
Long-term unemployment |
UL |
|
Probability of escape from unemployment |
π |
|
Total flow from employment to unemployment |
FEU |
|
Flow from unemployment to newly created jobs; job creation |
FUEV |
|
Flow from employment to not-in-labour-force; job destruction |
FENV |
|
Flow from not-in-labour-force to newly created jobs; job creation |
FNEV |
|
Flow of new vacancies to unemployed workers |
VOU |
Table 2
Exogenous Variables in the Model.
|
Description |
Variable |
|
Flow of vacancies to non-unemployed workers |
V OEX |
|
Outflow from unemployment to employment other than job creation |
FUEX |
|
Outflow from employment to unemployment other than job destruction |
FEU X |
|
Added value per worker |
y |
|
Interest rate |
r |
|
Lump-sum taxes |
τ |
|
Unemployment benefits |
b |
|
Proportion of long-term unemployed in ALMPs |
λ |
3 The Control Methods
3.1 Purpose of the Control
We consider the unemployment rate to be the output of the model. The control
objective is to generate a policy for ALMPs that reduces the unemployment