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Social Insurance and Transition

Author

Listed:
  • Atkeson, Andrew
  • Kehoe, Patrick J

Abstract

The authors study the general equilibrium effects of social insurance on transition in a model in which the process of moving workers from matches in the state sector to new matches in the private sector takes time and involves uncertainty. As might be expected, adding social insurance to an economy without any improves welfare. Contrary to standard intuition, however, adding social insurance may slow transition. The authors show that this result depends crucially on general equilibrium interactions of interest rates and savings under alternative market structures. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Atkeson, Andrew & Kehoe, Patrick J, 1996. "Social Insurance and Transition," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 377-401, May.
  • Handle: RePEc:ier:iecrev:v:37:y:1996:i:2:p:377-401
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