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Does unemployment insurance crowd out home production?

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Author Info

  • Guler, Bulent
  • Taskin, Temel

Abstract

In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on a negative correlation between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data of the U.S. The empirical results suggest that moving to a two times more generous state would decrease time spent on home production about 22% for the unemployed. Then, we pursue a quantitative assessment of this empirical finding using a dynamic competitive equilibrium model in which households do home production as well as market production. The model is able to generate the empirical facts regarding the unemployment benefits and home production. The fact that unemployment insurance benefits crowd out home production is interpreted as a substitution between the two insurance mechanisms against loss of earnings during unemployment spells.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 62 (2013)
Issue (Month): C ()
Pages: 1-16

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Handle: RePEc:eee:eecrev:v:62:y:2013:i:c:p:1-16

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Unemployment insurance; Home production; Public insurance; Self insurance; Heterogeneous-agents models;

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References

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  1. Hone production vs. unemployment insurance
    by Economic Logician in Economic Logic on 2013-06-26 14:48:00

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