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Business Cycle Dependent Unemployment Insurance

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  • Torben M. Andersen
  • Michael Svarer

Abstract

The consequences of cylical contingencies in unemployment insurance systems are considered in a search-matching model allowing for shifts between “good” and “bad” states of nature. An argument for state contingencies is that insurance arguments are stronger and incentive effects weaker in "bad" than in "good" states of nature. We con.rm this and show that cyclically dependent benefit levels not only provide better insurance but may have structural effects implying that the structural (average) unemployment rate decreases, although the variability of unemployment may increase

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1498.

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Length: 41 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:kie:kieliw:1498

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References

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  24. Torben M. Andersen & Michael Svarer, 2011. "State Dependent Unemployment Benefits," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(2), pages 325-344, 06.
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  1. > Labor Economics > Unemployment Insurance > Optimal Unemployment Insurance
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Cited by:
  1. Camille Landais & Pascal Michaillat & Emmanuel Saez, 2010. "Optimal Unemployment Insurance over the Business Cycle," NBER Working Papers 16526, National Bureau of Economic Research, Inc.
  2. Kroft, Kory & Notowidigdo, Matthew J., 2012. "Should Unemployment Insurance Vary with the Unemployment Rate? Theory and Evidence," CLSSRN working papers clsrn_admin-2012-26, Vancouver School of Economics, revised 29 Oct 2012.
  3. Torben Andersen, 2010. "Unemployment Persistence," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 11(1), pages 23-28, 04.
  4. Pollak, Andreas, 2013. "Employment Insurance and the Business Cycle," MPRA Paper 49358, University Library of Munich, Germany.
  5. Kurt Mitman & Stanislav Rabinovich, 2011. "Pro-cyclical Unemployment Benefits? Optimal Policy in an Equilibrium Business Cycle Model," PIER Working Paper Archive 11-023, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  6. Moyen, Stéphane & Stähler, Nikolai, 2009. "Unemployment insurance and the business cycle: prolong benefit entitlements in bad times?," Discussion Paper Series 1: Economic Studies 2009,30, Deutsche Bundesbank, Research Centre.

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