Are the unemployed financially trapped in Serbia?
This paper explores the incentives for the unemployed to accept formal work, using the net replacement rate indicator, defined as the ratio of net income while being out of work and net income in work. We assume that the unemployed will make employment transition for the reservation wage. The unempl...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
University of Novi Sad - Faculty of Economics, Subotica
2016-01-01
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| Series: | Anali Ekonomskog fakulteta u Subotici |
| Subjects: | |
| Online Access: | https://scindeks-clanci.ceon.rs/data/pdf/0350-2120/2016/0350-21201636039A.pdf |
| Summary: | This paper explores the incentives for the unemployed to accept formal work, using the net replacement rate indicator, defined as the ratio of net income while being out of work and net income in work. We assume that the unemployed will make employment transition for the reservation wage. The unemployed are financially trapped if net income out of work exceeds net income in work. We use 2013 Survey of Income and Living Conditions data to calculate net replacement rate. Net replacement rate amounts to 57% on average, meaning that unemployed do have incentives to work for the reservation wage. The coverage of unemployment benefit is low, as only 8% of the unemployed receive benefits, and their net replacement rate amounts to 82%. Although the unemployed receiving benefits have lower incentives to seek employment comparing with the all unemployed, we find that they are not financially trapped. The value of net replacement rate significantly depends on the wage assumption. |
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| ISSN: | 0350-2120 2683-4162 |