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Choice of Social Security System

Author

Listed:
  • Larsen, Birthe

    (Department of Economics, Copenhagen Business School)

  • Waisman, Gisela

    (Sulcis, Stockholm University and Finansdepartementet, Stockholm)

Abstract

This paper examines the impact of unemployment insurance and social assistance on wages, unemployment, education and inequality when educational choice and the decision to pay into an unemployment insurance fund is endogenous and when workers are heterogenous in terms of initial wealth. The higher the worker’s wealth, the lower social assistance the worker receives if unemployed. The model can help shed light on the puzzle why only some workers pay into an unemployment insurance fund as well as the relative compressed wage structure in countries with generous social assistance and unemployment insurance. We use this set up to consider whether we should as society increase social assistance or unemployment insurance, if the aim is to reduce inequality.

Suggested Citation

  • Larsen, Birthe & Waisman, Gisela, 2021. "Choice of Social Security System," Working Papers 7-2021, Copenhagen Business School, Department of Economics.
    • Handle: RePEc:hhs:cbsnow:2021_007
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    References listed on IDEAS

    as
    1. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
    2. John M. Abowd & Laurence Allain, 1996. "Compensation Structure and Product Market Competition," Annals of Economics and Statistics, GENES, issue 41-42, pages 207-217.
    3. repec:adr:anecst:y:1996:i:41-42:p:09 is not listed on IDEAS
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    More about this item

    Keywords

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    JEL classification:

    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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