Transfert de prestations, salaires et chômage d'équilibre

We study the long-term effects of a policy that consists in converting long-term unemployment benefits into employment subsidies. Long-term unemployed are supposed to have a lower productivity, and so, are discriminated against. Consequently, they have a lower exit rate from unemployment and earn lower wages. For a given tax rate, we show that such a policy increases wages and employment, whereas unemployment benefits are reduced. It is also shown that this policy targeted on workers employed at the minimum wage could be much more efficient, leading to higher employment rate welfare.