On the Desirability to Switch from a Standard Unemployment Insurance Program to a System of Unemployment Accounts

This paper uses a heterogeneous agent model with liquidity constrained workers subject to employment shocks to study the feasibility of a system of unemployment accounts with the example of Oregon under various moral hazard scenarios. We determine the optimal policy parameter vector and compare outcomes with (optimal) unemployment insurance and self-insurance. We expand also the model to take into account skill heterogeneity across agents. We find that unemployment accounts are prefered with even small levels of moral hazard.