This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we … develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and … (human capital) risk increases social welfare if the government adjusts the tax-and-transfer system optimally. Finally, we …

This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we … develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and … (human capital) risk increases social welfare if the government adjusts the tax-and-transfer system optimally. Finally, we …

at risk in the euro area and in the United States. We model the asymmetry of the shocks to changes in the unemployment … risk defined as the possible joint event of large increases in the unemployment rate and large annual rates of inflation … rate as a function of real activity and financial risk factors. We find that the conditional distribution of the changes in …