Unemployment Insurance under Moral Hazard and Limited Commitment: Public versus Private Provision
This paper analyzes a model of private unemployment insurance under limited commitment and a model of public unemployment insurance subject to moral hazard in an economy with a continuum of agents and an infinite time horizon. The dynamic and steady-state properties of the optimum private unemployment insurance scheme are established. The interaction between public and private unemployment insurance schemes is examined. Examples are constructed to show that for some parameter values increased public insurance can reduce welfare by crowding out private insurance more than one-to-one and that for other parameter values a mix of both public and private insurance can be welfare maximizing. Copyright 2007 Blackwell Publishing, Inc..
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Volume (Year): 9 (2007)
Issue (Month): 1 (02)
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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.:
- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2000.
"Mutual Insurance, Individual Savings and Limited Commitment,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 216-246, April.
- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 1998. "Mutual Insurance, Individual Savings and Limited Commitment," Keele Department of Economics Discussion Papers (1995-2001) 98/14, Department of Economics, Keele University.
- Jonathan Thomas & Tim Worrall, 1988. "Self-Enforcing Wage Contracts," Review of Economic Studies, Oxford University Press, vol. 55(4), pages 541-554.
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