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Voluntary income sharing and the design of unemployment insurance


  • Dan Anderberg


This paper uses a model of search unemployment to discuss the interaction between publicly provided insurance and informal insurance through voluntary income sharing, e.g., between spouses. Income sharing reduces the optimal level of public unemployment insurance. While it is always individually rational for partners to share income, the effect of voluntary income sharing on welfare will be negative unless partners can either observe each other's search behavior or are sufficiently altruistic towards each other. The model is also used to examine a family-based policy. The welfare gains from using such policy are argued to be small. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Dan Anderberg, 2003. "Voluntary income sharing and the design of unemployment insurance," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(1), pages 71-90, February.
  • Handle: RePEc:spr:jopoec:v:16:y:2003:i:1:p:71-90
    DOI: 10.1007/s001480200121

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    References listed on IDEAS

    1. Mortensen, Dale & Pissarides, Christopher, 2011. "Job Creation and Job Destruction in the Theory of Unemployment," Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 1, pages 1-19.
    2. Fredriksson, Peter & Holmlund, Bertil, 2001. "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 370-399, April.
    3. Davidson, Carl & Woodbury, Stephen A., 1997. "Optimal unemployment insurance," Journal of Public Economics, Elsevier, vol. 64(3), pages 359-387, June.
    4. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627 Elsevier.
    5. Shavell, Steven & Weiss, Laurence, 1979. "The Optimal Payment of Unemployment Insurance Benefits over Time," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1347-1362, December.
    6. Merrigan, Philip & Normandin, Michel, 1996. "Precautionary Saving Motives: An Assessment from UK Time Series of Cross-Sections," Economic Journal, Royal Economic Society, vol. 106(438), pages 1193-1208, September.
    7. Flemming, J. S., 1978. "Aspects of optimal unemployment insurance : Search, leisure, savings and capital market imperfections," Journal of Public Economics, Elsevier, vol. 10(3), pages 403-425, December.
    8. James Costain, 1997. "Unemployment insurance with endogenous search intensity and precautionary saving," Economics Working Papers 243, Department of Economics and Business, Universitat Pompeu Fabra.
    9. Stephen A. Woodbury, 2009. "Unemployment," Chapters,in: Labor and Employment Law and Economics, chapter 17 Edward Elgar Publishing.
    10. Cox, Donald, 1987. "Motives for Private Income Transfers," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 508-546, June.
    11. Coate, Stephen & Ravallion, Martin, 1993. "Reciprocity without commitment : Characterization and performance of informal insurance arrangements," Journal of Development Economics, Elsevier, vol. 40(1), pages 1-24, February.
    12. Hopenhayn, Hugo A & Nicolini, Juan Pablo, 1997. "Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 412-438, April.
    13. Chami, Ralph & Fischer, Jeffrey H, 1996. "Altruism, Matching, and Nonmarket Insurance," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 630-647, October.
    14. Eric M. Engen & Jonathan Gruber, 1995. "Unemployment Insurance and Precautionary Saving," NBER Working Papers 5252, National Bureau of Economic Research, Inc.
    15. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 546-572, July.
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    Cited by:

    1. El Lahga, AbdelRahmen & Moreau, Nicolas, 2007. "Would you Marry me? The Effects of Marriage on German Couples? Allocation of Time," ZEW Discussion Papers 07-024, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. El Lahga, AbdelRahmen & Moreau, Nicolas, 2007. "The Effects of Marriage on Couples’ Allocation of Time Between Market and Non-Market Hours," IZA Discussion Papers 2619, Institute for the Study of Labor (IZA).

    More about this item


    JEL classification: H11; H31; J68; Key words: Income sharing; unemployment insurance; altruism;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy


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