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Productivity Gains from Unemployment Insurance

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  • Daron Acemoglu
  • Robert Shimer

Abstract

This paper argues that unemployment insurance increases labor productivity by encouraging workers to seek higher productivity jobs, and by encouraging firms to create those jobs. We use a quantitative general equilibrium model to investigate whether this effect is comparable in magnitude to the standard moral hazard effects of unemployment insurance. Our model economy captures the behavior of the U.S. labor market for high school graduates quite well. When unemployment insurance becomes more generous starting from the current U.S. levels, there is an increase in unemployment similar in magnitude to the micro-estimates, but because the composition of jobs also changes, total output and welfare increase as well.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7352.

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Date of creation: Sep 1999
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Publication status: published as Acemoglu, Daron and Robert Shimer. "Productivity Gains From Unemployment Insurance," European Economic Review, 2000, v44(7,Jun), 1195-1224.
Handle: RePEc:nbr:nberwo:7352

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. New insights on optimal unemployment insurance
    by Economic Logician in Economic Logic on 2008-12-23 12:36:00
  2. Rest unemployment
    by Economic Logician in Economic Logic on 2008-09-16 13:12:00
  3. En bra arbetslöshetsförsäkring skapar inte arbetslöshet men ger en bättre matchning på arbetsmarknaden
    by Roger Mörtvik in Utredarna on 2012-09-14 13:51:48
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