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Optimal Unemployment Insurance for Older Workers

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Author Info

  • Hairault, Jean-Olivier

    ()
    (University of Paris 1 Panthéon-Sorbonne)

  • Langot, François

    ()
    (University of Le Mans)

  • Ménard, Sébastien

    ()
    (GAINS, Université du Maine)

  • Sopraseuth, Thepthida

    ()
    (University of Cergy-Pontoise)

Abstract

This paper shows that optimal unemployment insurance contracts are age-dependent. Older workers have only a few years left on the labor market prior to retirement. This short horizon implies a more digressive replacement ratio. However, there is a sufficiently short distance to retirement for which flat unemployment benefits can be the optimal contract as the nearly retired unemployed workers rationally expect never to suffer from the punishment. This is why imposing a tax on the future job is particularly efficient in the context of older workers because the agency can now reward the job search by present employment subsidies. Moreover, we propose adopting a global approach to unemployment insurance by determining an optimal contract that integrates unemployment insurance and retirement pension systems.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4071.

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Length: 24 pages
Date of creation: Mar 2009
Date of revision:
Publication status: published in: Journal of Public Economics, 2012, 96 (5-6), 509-519
Handle: RePEc:iza:izadps:dp4071

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Related research

Keywords: recursive contracts; retirement; unemployment insurance; moral hazard;

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References

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  26. Jean-Olivier Hairault & Francois Langot & Thepthida Sopraseuth, 2010. "Distance to Retirement and Older Workers' Employment: The Case for Delaying the Retirement Age," Journal of the European Economic Association, MIT Press, vol. 8(5), pages 1034-1076, 09.
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Citations

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Cited by:
  1. Parsons, Donald O., 2014. "Job Displacement Insurance: An Overview," IZA Discussion Papers 8223, Institute for the Study of Labor (IZA).
  2. J. Ignacio García Pérez & Alfonso R. Sánchez Mártin, 2012. "Fostering job search among older workers: the case for pension reform," Working Papers 12.09, Universidad Pablo de Olavide, Department of Economics.
  3. Hairault, Jean-Olivier, 2012. "Pour l’emploi des seniors — Assurance chômage et licenciements," Opuscules du CEPREMAP, CEPREMAP, number 28, May.

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