Showing papers by "Libera Università Internazionale degli Studi Sociali Guido Carli published in 1988"

Underemployment Benefit Effects on Employment and Income Distribution: What We Should Learn from the System of the Cassa Integrazione Guadagni

Abstract: Two aspects distinguish the Cassa Integrazione Guadagni (CIG) from most other European under or unemployment public benefit schemes: an institutionally fixed replacement ratio and a rotation principle imposing a labour-sharing regime Within a labour-sharing approach, the comparison between the CIG unitary subsidy proportioned to the corresponding wage rate and the European standard fixed in nominal terms, shows that, ceteris paribus, employment is lower and profits are higher in the former system Moreover, given the indexation provided by CIG, aggregate supply is vertical in this system while it is positively sloped in the other Consequently, employment, real profits and real wages are constant in the former case, while they are positively correlated to the good quality of the states of nature in the latter If the tax-based financing of public benefits is not — as it is not in Italy — experience-rated, the CIG regime induces moral hazard behaviours harmful to the State: it leads firms and unions to agree on relatively high wages, thus raising the value of both working and non-working time Without affecting the unions’average requests and the firms’profits, this attitude reduces employment and increases under or unemployment public subsidies