Dans cette étude, nous montrons que le risque moral joue un maigre rôle dans la détermination de la générosité de l'assurance chômage optimale lors d'un vote. Dans une économie d'équilibre général dynamique, nous trouvons que seule la présence d'un nombre très important d'abuseurs conduit à une perte significative de générosité dans les allocations d'assurance chômage. Ce résultat va à l'encontre de la littérature existante. En plus de différences dans les actifs détenus, les agents modélisés diffèrent dans leurs habiletés, ce qui se traduit par des différences de salaires et de probabilités de chômage. Ces résultats peuvent avoir des conséquences importantes au vu des réformes récentes de l'assurance chômage.">

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Voting on Unemployment Insurance Generosity

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Author Info
Stephane Pallage () (Center for Research on Economic Fluctuations and Employment, UQAM)
Christian Zimmermann () (Center for Research on Economic Fluctuations and Employment, UQAM)

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Abstract

In this paper, we show that in a dynamic general equilibrium economy, the presence of moral hazard need not induce large cuts in optimal unemployment insurance benefits when agents are asked to vote on these benefits. We find that it takes a quite large proportion of "shirkers" to bend the generosity of the unemployment insurance program desired by the median voter. This result stands in sharp contrast to the extant literature. In addtion to their differences in asset holdings, agents in our economy are heterogeneous in skills and may differ in their wage as well as in their transition in and out of unemployment. Our results have important implications in the light of recent unemployment insurance reforms.

Dans cette étude, nous montrons que le risque moral joue un maigre rôle dans la détermination de la générosité de l'assurance chômage optimale lors d'un vote. Dans une économie d'équilibre général dynamique, nous trouvons que seule la présence d'un nombre très important d'abuseurs conduit à une perte significative de générosité dans les allocations d'assurance chômage. Ce résultat va à l'encontre de la littérature existante. En plus de différences dans les actifs détenus, les agents modélisés diffèrent dans leurs habiletés, ce qui se traduit par des différences de salaires et de probabilités de chômage. Ces résultats peuvent avoir des conséquences importantes au vu des réformes récentes de l'assurance chômage.

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Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 64.

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Length: 18 pages
Date of creation: Jul 1998
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Publication status: published in International Economic Review, (42(4), pp. 903-923, November 2001
Handle: RePEc:cre:crefwp:64

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Related research
Keywords: Unemployment Insurance Shirking Heterogeneity Voting

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Find related papers by JEL classification:
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
D7 - Microeconomics - - Analysis of Collective Decision-Making

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  5. Greenwood, Jeremy & Huffman, Gregory W., 1987. "A dynamic equilibrium model of inflation and unemployment," Journal of Monetary Economics, Elsevier, vol. 19(2), pages 203-228, March. [Downloadable!] (restricted)
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  7. Acemoglu, D. & Shimer, R., 1997. "Efficient Unemployment Insurance," Working papers 97-9, Massachusetts Institute of Technology (MIT), Department of Economics.
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  8. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November. [Downloadable!] (restricted)
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  9. Andolfatto, David & Gomme, Paul, 1996. "Unemployment insurance and labor-market activity in Canada," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 44(1), pages 47-82, June. [Downloadable!] (restricted)
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  18. Hopenhayn, Hugo A & Nicolini, Juan Pablo, 1997. "Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 412-38, April.
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  19. Wang, Cheng & Williamson, Stephen, 1996. "Unemployment insurance with moral hazard in a dynamic economy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 44(1), pages 1-41, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Stéphane Pallage & Christian Zimmermann, 1999. "Assurance chômage et sociétés," Cahiers de recherche du Département des sciences économiques, UQAM 9904, Université du Québec à Montréal, Département des sciences économiques. [Downloadable!]
  2. Stephane Pallage & Christian Zimmermann, 1999. "Heterogeneous Labor Markets and the Generosity Towards the Unemployed: An International Perspective," Cahiers de recherche CREFE / CREFE Working Papers 88, CREFE, Université du Québec à Montréal. [Downloadable!]
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