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Advisor(s)
Abstract(s)
The paper constructs an asymmetric information model to investigate the efficiency and equity cases for government mandated benefits. A mandate can improve workers’ insurance, and may also redistribute in favour of more ‘deserving’ workers. The risk is that it may also reduce output. The more diverse are free market contracts—separating the various worker types—the more likely it is that such output effects will on balance serve to reduce welfare. It is shown that adverse effects can be reduced by restricting mandates to larger firms. An alternative to a mandate is direct government provision. We demonstrate that direct government provision has the advantage over mandates of preserving separations.
Description
Keywords
Asymmetric information Labour mandates Compensation packages
Pedagogical Context
Citation
Addison, John T., Richard C. Barrett e W. Stanley Siebert (2006). "Building blocks in the economics of mandates". Portuguese Economic Journal, 5(2):69-87
Publisher
Springer Verlag