Efficient Unemployment Insurance

This paper argues that moderate unemployment insurance not only reduces the uncertainty faced by risk-averse workers but also improves efficiency and raises output. We develop a model in which the decentralized equilibrium is inefficient without unemployment insurance, because the labor market endogenously creates jobs that provide risk-averse workers with low unemployment risk and low wages. Essentially, the labor market offers its own version of insurance.

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Year of publication:	1997
Authors:	Acemoglu, D. ; Shimer, R.
Institutions:	Economics Department, Massachusetts Institute of Technology (MIT)
Subject:	EFFICIENCY \| WAGES \| UNEMPLOYMENT \| RISK

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Series:	Working papers.
Type of publication:	Book / Working Paper
Notes:	37 pages
Classification:	D83 - Search, Learning, Information and Knowledge ; J64 - Unemployment: Models, Duration, Incidence, and Job Search ; J65 - Unemployment Insurance; Severance Pay; Plant Closings
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005450532