Unemployment Insurance under Moral Hazard and Limited Commitment: Public versus Private Provision
This paper analyses a model of private unemployment insurance under limited commitment and a model of public unemployment insurance subject to moral hazard in an economy with a continuum of agents and an infinite time horizon. The dynamic and steady-state properties of the private unemployment insurance scheme are established.Theinteractionbetweenthepublicandprivateunemploymentinsurance schemes is examined. Examples are constructed to show that for some parameter values increased public insurance can reduce welfare by crowding out private insurance more than one-to-one and that for other parameter values a mix of both public and private insurance can be welfare maximising.
|Date of creation:||Oct 2002|
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- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 1998.
"Mutual Insurance, Individual Savings and Limited Commitment,"
Keele Department of Economics Discussion Papers (1995-2001)
98/14, Department of Economics, Keele University.
- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2000. "Mutual Insurance, Individual Savings and Limited Commitment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 216-246, April.
- Jonathan Thomas & Tim Worrall, 1988. "Self-Enforcing Wage Contracts," Review of Economic Studies, Oxford University Press, vol. 55(4), pages 541-554.
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