The Canadian unemployment insurance program is designed to reflect the varying risk of joblessness across regions. Regions that are considered low-risk areas subsidize higher risk ones. A region's risk is typically proxied by its relative unemployment rate. We use a dynamic, heterogeneous-agent model calibrated to Canada to analyze voters preferences between a uniformly generous unemployment insurance and the current system with asymmetric generosity. We find that Canada's unusual unemployment insurance system is surprisingly close to what voters would choose in spite of the possibilities of moral hazard and self-insurance through asset build-up.
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Paper provided by University of Connecticut, Department of Economics in its series Working papers with number
2004-34.
Length: 27 pages Date of creation: Oct 2004 Date of revision: Handle: RePEc:uct:uconnp:2004-34
Note: This paper was presented at the 2003 meeting of the European Society for Population Economics at NYU, the 2003 Montreal Macro Workshop, the 2003 meeting of the Society for Economic Dynamics in Paris, and the Midwest Macro Conference at Iowa State University. We gratefully acknowledge financial support from FCAR/FQRSC. Contact details of provider: Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063 Phone: (860) 486-4889 Fax: (860) 486-4463 Web page: http://www.econ.uconn.edu/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (Christian Zimmermann).
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Joao Gomes & Jeremy Greenwood & Sergio T. Rebelo, 2001.
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[Downloadable!]
Other versions:
Joao Gomes & Jeremy Greenwood & Sergio Rebelo, 1997.
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NBER Working Papers
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"The Survival of the Welfare State,"
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[Downloadable!]
Other versions:
Hassler, John & Mora, Jose & Storesletten, Kjetil & Zilibotti, Fabrizio, 2002.
"The Survival of the Welfare State,"
Seminar Papers
704, Stockholm University, Institute for International Economic Studies.
[Downloadable!]
Pallage, Stephane & Zimmermann, Christian, 2001.
"Voting on Unemployment Insurance,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 903-23, November.
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)