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Moral Hazard, Optimal Unemployment Insurance, and Experience Rating

Listed author(s):
  • Williamson, Stephen D.

    ()

    (University of Iowa)

  • Wang, Cheng

    ()

    (Carnegie Mellon University)

This paper is concerned with evaluating alternative unemployment insurance (UI) schemes in a dynamic economy with moral hazard. We consider changes in the size and duration of UI benefits, and the effects of experience rating, and use a dynamic contracting approach to determine a benchmark optimal allocation. Radical changes in the current UI system increase welfare, but not by much. A move to full experience rating has distributional effects, but the aggregate effects are negligible.

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File URL: http://www.biz.uiowa.edu/faculty/swilliamson/papers/unins4.pdf
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Paper provided by University of Iowa, Department of Economics in its series Working Papers with number 99-03.

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Length: 58 pages
Date of creation: Jan 1999
Handle: RePEc:uia:iowaec:99-03
Contact details of provider: Postal:
University of Iowa, Department of Economics, Henry B. Tippie College of Business, Iowa City, Iowa 52242

Phone: (319) 335-0829
Fax: (319) 335-1956
Web page: http://tippie.uiowa.edu/economics/

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