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Voting on Unemployment Insurance

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  • Pallage, Stephane
  • Zimmermann, Christian

Abstract

In this article, we ask heterogeneous agents in a dynamic general equilibrium economy to vote on the generosity of their unemployment insurance program. We observe the influence on their vote of (1) moral hazard, (2) private alternatives, and (3) changes in employment status. Agents differ in skills, employment probabilities, income prospects, and assets. For a calibration to the United States, we show that: (1) in contrast to the literature, plausible levels of moral hazard need not induce large cuts in optimal benefits. (2) Switching to private insurance is rejected for most status quo, though it would be as generous. (3) Skill groups vote as a block. For reasonable discount factors, solidarity is never broken simultaneously for more than one group.

Suggested Citation

  • 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 903-923, November.
  • Handle: RePEc:ier:iecrev:v:42:y:2001:i:4:p:903-23
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    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 18:36:00

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    Cited by:

    1. Alice Fabre & Stéphane Pallage & Christian Zimmermann, 2014. "Universal Basic Income versus Unemployment Insurance," Cahiers de recherche 1427, CIRPEE.
    2. Stéphane Pallage & Christian Zimmermann, 2006. "On voters’ attitudes towards unemployment insurance subsidies across regions: a Canadian simulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 391-410, June.
    3. Laszlo Goerke & Markus Pannenberg & Heinrich Ursprung, 2010. "A positive theory of the earnings relationship of unemployment benefits," Public Choice, Springer, vol. 145(1), pages 137-163, October.
    4. Pallage, Stéphane & Scruggs, Lyle & Zimmermann, Christian, 2013. "Measuring Unemployment Insurance Generosity," Political Analysis, Cambridge University Press, vol. 21(04), pages 524-549, September.
    5. Mukoyama, Toshihiko, 2013. "Understanding the welfare effects of unemployment insurance policy in general equilibrium," Journal of Macroeconomics, Elsevier, vol. 38(PB), pages 347-368.
    6. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 2005. "A Positive Theory Of Geographic Mobility And Social Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(1), pages 263-303, February.
    7. Niklas Potrafke, 2010. "Labor market deregulation and globalization: empirical evidence from OECD countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 146(3), pages 545-571, September.
    8. Fabre, Alice & Pallage, Stéphane, 2015. "Child labor, idiosyncratic shocks, and social policy," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 394-411.
    9. Stéphane Pallage & Christian Zimmermann, 1999. "Assurance chômage et sociétés," Cahiers de recherche du Département des sciences économiques, UQAM 9904, Université du Québec à Montréal, Département des sciences économiques.
    10. Anesi, Vincent & De Donder, Philippe, 2009. "A Positive Theory of Unemployment Insurance and Employment Protection," CEPR Discussion Papers 7333, C.E.P.R. Discussion Papers.
    11. Stéphane Pallage & Michel A. Robe & Catherine Bérubé, 2006. "The Potential of Foreign Aid as Insurance," IMF Staff Papers, Palgrave Macmillan, vol. 53(3), pages 1-5.
    12. John Hassler & José V. Rodríguez Mora & Kjetil Storesletten & Fabrizio Zilibotti, 1998. "Equilibrium unemployment insurance," Economics Working Papers 605, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 1999.
    13. Kankanamge, Sumudu & Weitzenblum, Thomas, 2016. "Time-consistent unemployment insurance," TSE Working Papers 16-657, Toulouse School of Economics (TSE).
    14. Stéphane Pallage & Lyle Scruggs & Christian Zimmermann, 2009. "Unemployment Insurance Generosity: A Transatlantic Comparison," Annals of Economics and Statistics, GENES, issue 95-96, pages 15-23.
    15. Andreas Pollak, 2005. "Optimal Unemployment Insurance and Voting," Computational Economics 0505002, University Library of Munich, Germany.
    16. Stéphane Pallage & Alice Fabre, 2010. "Child Labor and Aggregate Fluctuations," 2010 Meeting Papers 1037, Society for Economic Dynamics.
    17. Pallage, Stephane & Zimmermann, Christian, 2005. "Heterogeneous labor markets and generosity towards the unemployed: an international perspective," Journal of Comparative Economics, Elsevier, vol. 33(1), pages 88-106, March.
    18. Delacroix, Alain, 2006. "A multisectorial matching model of unions," Journal of Monetary Economics, Elsevier, vol. 53(3), pages 573-596, April.
    19. Vincent Anesi & Philippe De Donder, 2013. "A coalitional theory of unemployment insurance and employment protection," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(3), pages 941-977, April.

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