The Welfare Impact of Reemployment Bonuses
This paper investigates the welfare impact of reemployment bonuses in a dynamic job search model. Reemployment bonuses, monetary incentives offered to workers who obtain employment, may mitigate the moral hazard in unemployment insurance (UI) while preserving consumption smoothing. Using a sufficient statistics approach, I first show the substantial positive impact of reemployment bonuses on welfare given the current level of UI benefits. Then, by using a quantitative model of job search, consumption, and saving, I study the optimal combination of UI benefits and reemployment bonuses. I find that the optimal UI benefit level is higher when reemployment bonuses are incorporated. Compared to the welfare gain achieved by implementing only the optimal level of UI benefits, the optimal combination of UI benefits and reemployment bonuses achieves a 56 percent larger welfare gain
Year of publication: |
[2023]
|
---|---|
Authors: | Komatsu, Katsuhiro |
Publisher: |
[S.l.] : SSRN |
Subject: | Wohlfahrtsanalyse | Welfare analysis | Arbeitslosenversicherung | Unemployment insurance | Leistungsentgelt | Performance pay | Arbeitsuche | Job search | Arbeitsmarktpolitik | Labour market policy | Arbeitsmarktintegration | Labour market integration | Theorie | Theory |
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