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Optimal Unemployment Insurance: A Survey

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  • Edi Karni

Abstract

Unemployment insurance improves the allocation of risk bearing at the cost of reduced incentives for work. In the past two decades, a branch of the literature has emerged that deals with the optimal design of unemployment insurance. This literature has been influenced by ideas and methods from information economics and by theories from labor economics. The result is a collection of models designed to highlight a variety of issues pertaining to the provision of optimal unemployment insurance. This paper reviews these issues, summarizes the relevant literature, assesses its accomplishments, and points out problems that require further study.

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  • Edi Karni, 1999. "Optimal Unemployment Insurance: A Survey," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 442-465, October.
    • Handle: RePEc:wly:soecon:v:66:y:1999:i:2:p:442-465
    DOI: 10.1002/j.2325-8012.1999.tb00259.x
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    References listed on IDEAS

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    1. 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.
    2. J. S. Flemming, 1977. "Aspects of Optimal Unemployment Insurance: Search, Leisure and Capital Market Imperfections," NBER Working Papers 0214, National Bureau of Economic Research, Inc.
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    6. Wang, Cheng & Williamson, Stephen, 1996. "Unemployment insurance with moral hazard in a dynamic economy," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 44(1), pages 1-41, June.
    7. Topel, Robert H, 1984. "Experience Rating of Unemployment Insurance and the Incidence of Unemployment," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 61-90, April.
    8. W. Henry Chiu & Edi Karni, 1998. "Endogenous Adverse Selection and Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 806-827, August.
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    12. Hopenhayn, Hugo A., 1996. "Unemployment insurance with moral hazard in a dynamic economy A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 44(1), pages 43-46, June.
    13. Mortensen, Dale T., 1983. "A welfare analysis of unemployment insurance: Variations on second-best themes," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 19(1), pages 67-97, January.
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    Cited by:

    1. Hagedorn, Marcus & Kaul, Ashok & Mennel, Tim, 2010. "An adverse selection model of optimal unemployment insurance," Journal of Economic Dynamics and Control, Elsevier, vol. 34(3), pages 490-502, March.
    2. Boadway,Robin & Cuff,Katherine, 2022. "Tax Policy," Cambridge Books, Cambridge University Press, number 9781108949453.

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