Mazur, K. (2014). Subsidy to search: welfare consequences of benefit entitlements for quitters [Master Thesis, Technische Universität Wien]. reposiTUm. https://doi.org/10.34726/hss.2014.24931
In this paper I analyze numerically and quantitatively a model of labor search with unemployment insurance, voluntary quits and various labor attachment requirements. In particular, I study welfare consequences of unemployment insurance design where workers who quit their jobs voluntarily are entitled to benefits. A simulation of the model calibrated to the US labor market shows that there are possible welfare gains associated with pursuing optimal re-entitlement policy for workers quitting their jobs voluntarily as compared to the actual policy employed in the US. By inducing monetary search costs and different unemployment benefit eligibility requirements, the model provides an explanation for empirical observations about differences in unemployment rate and income inequality between the US and European labor markets.