IDEAS home Printed from https://ideas.repec.org/p/ctl/louvir/1995001.html
   My bibliography  Save this paper

Envy-Minimizing Unemployment Benefits

Author

Listed:
  • Arnsperger, Christian

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Chaire Hoover)

  • de la Croix, David

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))

Abstract

This paper offers an analysis of the optimality of unemployment benefits based on the concept of no-envy. Using a general equilibrium framework whit uncertainty, we derive the conditions for a trade-off between the intensity of envy and the expected percentage of envious persons. If the government’s aversion for the intensity of envy is not too strong (alongside conditions on households’ utilities), the optimal benefit is positive and below the full insurance level. We also show that, for a low enough aversion for the intensity of envy, the optimal replacement ratio decreases with unfavorable changes in the distribution of the technological shock.

Suggested Citation

  • Arnsperger, Christian & de la Croix, David, 1994. "Envy-Minimizing Unemployment Benefits," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1995001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:1995001
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. David Easley & Nicholas M. Kiefer & Uri Possen, 1985. "An Equilibrium Analysis of Optimal Unemployment Insurance and Taxation," The Quarterly Journal of Economics, Oxford University Press, vol. 100(Supplemen), pages 989-1010.
    2. Feldman, Allan M & Kirman, Alan, 1974. "Fairness and Envy," American Economic Review, American Economic Association, vol. 64(6), pages 995-1005, December.
    3. Elisha A. Pazner & David Schmeidler, 1978. "Egalitarian Equivalent Allocations: A New Concept of Economic Equity," The Quarterly Journal of Economics, Oxford University Press, vol. 92(4), pages 671-687.
    4. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
    5. Russell Cooper & Andrew John, 1988. "Coordinating Coordination Failures in Keynesian Models," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 441-463.
    6. Moulin, Herve, 1994. "Social choice," Handbook of Game Theory with Economic Applications,in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 31, pages 1091-1125 Elsevier.
    7. Marceau, Nicolas & Boadway, Robin, 1991. "The Redistributive Role of Minimum Wage Legislation and Unemployment Insurance," Queen's Economics Department Working Papers 273203, Queen's University - Department of Economics.
    8. Diamantaras, Dimitrios & Thomson, William, 1990. "A refinement and extension of the no-envy concept," Economics Letters, Elsevier, vol. 33(3), pages 217-222, July.
    9. Brown, Murray & Wolfstetter, Elmar, 1988. " Optimal Unemployment Insurance and Experience Rating," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(4), pages 529-547.
    10. Varian, Hal R., 1974. "Equity, envy, and efficiency," Journal of Economic Theory, Elsevier, vol. 9(1), pages 63-91, September.
    11. Baily, Martin Neil, 1978. "Some aspects of optimal unemployment insurance," Journal of Public Economics, Elsevier, vol. 10(3), pages 379-402, December.
    12. Lindbeck, A. & Molander, P. & Persson, T. & Paterson, O. & Sandmo, A. & Swedenborg, B. & Thygesen, N., 1993. "Options for Economic and Political Reform in Sweden," Papers 540, Stockholm - International Economic Studies.
    13. William THOMSON, 1994. "L’absence d’envie ; une introduction," Discussion Papers (REL - Recherches Economiques de Louvain) 1994012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    14. William Thomson, 2007. "Fair Allocation Rules," RCER Working Papers 539, University of Rochester - Center for Economic Research (RCER).
    15. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
    16. Wadsworth, Jonathan, 1991. "Unemployment Benefits and Search Effort in the UK Labour Market," Economica, London School of Economics and Political Science, vol. 58(229), pages 17-34, February.
    17. Phipps, Shelley, 1991. "Equity and Efficiency Consequences of Unemployment Insurance Reform in Canada: The Importance of Sensitivity Analyses," Economica, London School of Economics and Political Science, vol. 58(230), pages 199-214, May.
    18. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    envy; unemployment benefits; fairness; employment;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:1995001. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginie LEBLANC). General contact details of provider: http://edirc.repec.org/data/iruclbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.