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The Unemployed Individual's Marginal Willingness to Pay for the Remaining Entitlement Period
Author(s) -
Van Ommeren Jos
Publication year - 2003
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/1467-9914.00230
Subject(s) - entitlement (fair division) , economics , willingness to pay , unemployment , period (music) , value (mathematics) , marginal utility , labour economics , actuarial science , microeconomics , macroeconomics , mathematics , statistics , physics , acoustics
. This paper introduces a method of estimating the unemployed individual's marginal willingness to pay for the remaining entitlement period by application of search theory. It is demonstrated that search theory implies that the unemployed individual's marginal willingness to pay for the remaining entitlement period must be less than the value of the unemployment benefit. When benefits expire, though, the willingness to pay for an additional period must be equal to the benefit received during that period. The empirical relevance of this method is shown by re‐interpreting the studies of Meyer ( Econometrica 58: 757–782, 1990) and Katz and Meyer ( Journal of Public Economics 41: 45–72, 1990).