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Productivity gains from unemployment insurance

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  • Acemoglu, Daron
  • Shimer, Robert

Abstract

This paper argues that unemployment insurance increases labor productivity by encouraging workers to seek higher productivity jobs, and by encouraging firms to create those jobs. We use a quantitative general equilibrium model to investigate whether this effect is comparable in magnitude to the standard moral hazard effects of unemployment insurance. Our model economy captures the behavior of the U.S. labor market for high school graduates quite well. When unemployment insurance becomes more generous starting from the current U.S. levels, there is an increase in unemployment similar in magnitude to the micro-estimates, but because the composition of jobs also changes, total output and welfare increase as well.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 44 (2000)
Issue (Month): 7 (June)
Pages: 1195-1224

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Handle: RePEc:eee:eecrev:v:44:y:2000:i:7:p:1195-1224

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  1. Marimon, Ramon & Zilibotti, Fabrizio, 1997. "Unemployment versus Mismatch of Talents: Reconsidering Unemployment Benefits," CEPR Discussion Papers 1769, C.E.P.R. Discussion Papers.
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  7. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
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  24. S. Rao Aiyagari, 1993. "Uninsured idiosyncratic risk and aggregate saving," Working Papers 502, Federal Reserve Bank of Minneapolis.
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  26. Huggett, Mark, 1993. "The risk-free rate in heterogeneous-agent incomplete-insurance economies," Journal of Economic Dynamics and Control, Elsevier, vol. 17(5-6), pages 953-969.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Rest unemployment
    by Economic Logician in Economic Logic on 2008-09-16 13:12:00
  2. En bra arbetslöshetsförsäkring skapar inte arbetslöshet men ger en bättre matchning på arbetsmarknaden
    by Roger Mörtvik in Utredarna on 2012-09-14 13:51:48
  3. New insights on optimal unemployment insurance
    by Economic Logician in Economic Logic on 2008-12-23 12:36:00
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