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The Fiscal Costs of Unemployment Insurance

Author

Listed:
  • Joaquín Herrera
  • Martin González-Rozada
  • Hernan Ruffo

Abstract

This paper studies the fiscal cost of unemployment insurance (UI). For that purpose, it surveys alternative methods used in the literature for estimating UI effects on government budget and compares them in a general setup. It then applies these methods using data from Argentina. Along with an estimate of the consumption drop upon unemployment, the paper evaluates the Marginal Value of Public Funds of UI and finds that, while results vary substantially depending on how fiscal externalities are considered, the value of UI tends to be positive and high.

Suggested Citation

  • Joaquín Herrera & Martin González-Rozada & Hernan Ruffo, 2025. "The Fiscal Costs of Unemployment Insurance," Department of Economics Working Papers 2025_09, Universidad Torcuato Di Tella.
    • Handle: RePEc:udt:wpecon:2025_09
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Unemployment Insurance; Impact evaluation; Welfare analysis.;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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