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 …

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 …

High unemployment and its social and economic consequences have lent urgency to the question of how to improve … unemployment insurance in bad times without jeopardizing incentives to work or public finances in the medium term. A possible … solution is a rule-based system that improves the generosity of unemployment insurance (replacement rate, benefit duration …