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Optimal Unemployment Insurance and Welfare Benefits in a Life-cycle model of Family Labor Supply and Savings

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  • Haan, Peter
  • Prowse, Victoria

Abstract

We specify and estimate a dynamic structural life-cycle model of labor supply, retirement and savings decisions of single-adult and couple households. Drawing on our model, we study the interplay between family labor supply and public insurance mechanisms. By including family labor supply, we recognize that the incentive effects and optimal design of public insurance programs may be impacted by a household's ability to adjust either one spouse's or both spouses' labor supply in response to wage and employment shocks. The analysis sheds new light on the optimal trade-off between insurance and incentives. In particular we show that family labor supply has quantitatively important implications for the optimal design of public insurance programs.

Suggested Citation

  • Haan, Peter & Prowse, Victoria, 2014. "Optimal Unemployment Insurance and Welfare Benefits in a Life-cycle model of Family Labor Supply and Savings," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100625, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc14:100625
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    References listed on IDEAS

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    1. Haan, Peter & Haywood, Luke & Schneider, Ulrich, 2016. "Labor Supply of Mothers: The Role of Time Discounting," VfS Annual Conference 2016 (Augsburg): Demographic Change 145751, Verein für Socialpolitik / German Economic Association.

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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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