Should UI Benefits Really Fall over Time?
Abstract
The issue of whether unemployment benefits should increase or decrease over the unemployment spell is analyzed in an analytically tractable model allowing moral hazard, adverse selection and hidden savings. Analytical results show that when the search productivity of unemployed is constant over the unemployment spell, benefits should typically increase or be constant. The only exception is when there is moral hazard and no hidden savings. In general, adverse selection problems calls for increasing benefits, moral hazard problems for constant benefits and decreasing search productivity for decreasing benefits.Download Info
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 804.Length:
Date of creation: 2002
Date of revision:
Handle: RePEc:ces:ceswps:_804
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Related research
Keywords: unemployment benefits; search; moral hazard; adverse selection;Other versions of this item:
- Hassler, John & Rodriguez Mora, José V., 2002. "Should UI Benefits Really Fall Over Time?," IZA Discussion Papers 622, Institute for the Study of Labor (IZA).
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Peter Fredriksson & Bertil Holmlund, 2006.
"Improving Incentives in Unemployment Insurance: A Review of Recent Research,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 20(3), pages 357-386, 07.
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- Christian Holzner & Volker Meier & Martin Werding, 2010.
"Time Limits in a Two-tier Unemployment Benefit Scheme under Involuntary Unemployment,"
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"Optimal unemployment insurance design: time limits, monitoring, or workfare?,"
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