Risk aversion does not justify the introduction of mandatory unemployment insurance in the shirking model
AbstractThe introduction of unemployment insurance is usually thought to increase welfare if workers are sufficiently risk averse. We analyse the effects of introducing mandatory unemployment insurance in the shirking model. Surprisingly, we find that introducing unemployment insurance reduces welfare irrespective of the degree of risk aversion.
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Bibliographic InfoPaper provided by University of Cologne, Department of Economics in its series Working Paper Series in Economics with number 19.
Date of creation: 09 Aug 2005
Date of revision:
Efficiency Wages; Shirking; Unemployment Insurance;
Find related papers by JEL classification:
- J0 - Labor and Demographic Economics - - General
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- H1 - Public Economics - - Structure and Scope of Government
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-09-11 (All new papers)
- NEP-DGE-2005-09-11 (Dynamic General Equilibrium)
- NEP-LAB-2005-09-11 (Labour Economics)
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