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Efficient Unemployment Insurance

This paper argues that moderate unemployment insurance not only reduces the uncertainty faced by risk-averse workers but also improves efficiency and raises output. We develop a model in which the decentralized equilibrium is inefficient without unemployment insurance, because the labor market endogenously creates jobs that provide risk-averse workers with low unemployment risk and low wages. Essentially, the labor market offers its own version of insurance.
Year of publication:
1997
Authors: Acemoglu, D. ; Shimer, R.
Institutions: Economics Department, Massachusetts Institute of Technology (MIT)
Subject: EFFICIENCY | WAGES | UNEMPLOYMENT | RISK
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In German libraries (KVK)
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Series:
Type of publication: Book / Working Paper
Notes:
37 pages
Classification: D83 - Search, Learning, Information and Knowledge ; J64 - Unemployment: Models, Duration, Incidence, and Job Search ; J65 - Unemployment Insurance; Severance Pay; Plant Closings
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Persistent link: https://www.econbiz.de/10005450532
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