transactions cost-mobility constraints. Contracts provide full unemployment insurance for risks that are diversifiable by pooling … response to demand and productivity shifts. Unemployment is sustained because the marginal value of labor is not equated across … among firms. Nondiversifiable (macro) risks are only partially shifted,largely through self-insurance (contingency saving …

provided unemployment insurance (UI) and loans against pension accounts changes over time in a model where unemployment may … unemployment; and even more so when there is a chance that the loan will not be repaid. As we present the optimal mix of loans and … loans should still be a part of the unemployment package for the young unemployed. We also show that, if the incidence of …

set of contingent claims conditional on this risk.We use the model to evaluate a tax-financed unemployment insurance … scheme. Higher insurance is beneficial for consumption smoothing, but because it raises workers' outside option value, it … stochastic ones---generate rather limited unemployment effects, unless workers are close to indifferent between working and not …

This paper presents new evidence on why unemployment insurance (UI) benefits affect search behavior and develops a … unemployment durations caused by UI benefits is due to a quot;liquidity effectquot; rather than distortions in marginal incentives …

welfare. This insight leads to a novel test for the optimality of unemployment insurance based on the responsiveness of … reservation wages to unemployment benefits. Some existing estimates imply significant gains to raising the current level of … unemployment benefits in the United States, but highlight the need for more research on the determinants of reservation wages. Our …

This paper develops a model with multiple steady states (low tax and low unemployment versus high tax and high … unemployment) in which equilibrium selection is not conditioned on a sunspot variable. Instead, large temporary shocks initiate … possible that the transition to the high-unemployment steady state after a negative shock can be avoided if the government …

Previous research on unemployment insurance (UI) has focused on the costs of the program, in terms of the distorting … effects of generous UI benefits on worker and firm behavior. For assessing the optimal size of an unemployment insurance … consumption for the unemployed was 7%; my results imply that, in the absence of unemployment insurance, this fall would have been …

Before 1979, unemployment insurance (UI) benefits were not treated as taxable income in the United States. Several … has had the predicted effect of reducing unemployment duration.The study uses data on a sample of persons that filed for … presents persuasive evidence of a tax effect on unemployment duration. The 1979 policy change is estimated to have reduced …

We study how the level of unemployment insurance (UI) benefits that trades off the consumption smoothing benefit with … moral hazard cost is procyclical, greater when the unemployment rate is relatively low. By contrast, our evidence suggests … standard deviation increase in the unemployment rate leads to a roughly 14 to 27 percentage point increase in the welfare …

This paper analyzes a social insurance system that integrates unemployment insurance with a pension program through an …-funded unemployment insurance program. We show that when the duration of unemployment is very short compared to the period of employment … individual account, allowing workers to borrow against their future wage income to finance consumption during an unemployment …