The Role Of Unemployment Insurance In An Economy With Liquidity Constraints And Moral Hazard
AbstractThe potential welfare benefits of unemployment insurance, along with the optimal replacement ratio, are studied using a quantitative dynamic general equilibrium model. To provide a role for unemployment insurance, agents in the authors' economy face exogenous idiosyncratic employment shocks and are unable to borrow or insure themselves through private markets. In the absence of moral hazard, replacement ratios as high as 0.65 are optimal and the welfare benefits of unemployment insurance are quite large. However, if there is moral hazard and the replacement ratio is not set optimally, the economy can be much worse-off than it would be without unemployment insurance. Copyright 1992 by University of Chicago Press.
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Bibliographic InfoPaper provided by California Los Angeles - Applied Econometrics in its series Papers with number 21.
Length: 39 pages
Date of creation: 1990
Date of revision:
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Postal: UNIVERSITY OF CALIFORNIA AT LOS ANGELES, DEPARTMENT OF ECONOMICS, PROGRAM IN APPLIED ECONOMETRICS, LOS ANGELES CALIFORNIA 90024 U.S.A.
Phone: (310) 825 1011
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Web page: http://www.econ.ucla.edu/
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moral hazard ; unemployment ; economic equilibrium;
Other versions of this item:
- Hansen, Gary D & Imrohoroglu, Ayse, 1992. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 118-42, February.
- Gary D. Hansen & Ayse Imrohoroglu, 1990. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," UCLA Economics Working Papers 583, UCLA Department of Economics.
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- New insights on optimal unemployment insurance
by Economic Logician in Economic Logic on 2008-12-23 12:36:00
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