Risk aversion does not justify the introduction of mandatory unemployment insurance in the shirking model

The introduction of unemployment insurance is usually thought to increase welfare if workers are sufficiently risk averse. We analyse the effects of introducing mandatory unemployment insurance in the shirking model. Surprisingly, we find that introducing unemployment insurance reduces welfare irrespective of the degree of risk aversion.

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Year of publication:	2005-08-09
Authors:	Fath, Julia ; Fuest, Clemens
Institutions:	Staatswissenschaftliches Seminar, Wirtschafts- und Sozialwissenschaftliche Fakultät
Subject:	Efficiency Wages \| Shirking \| Unemployment Insurance

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Extent:	application/pdf
Series:	Working Paper Series in Economics.
Type of publication:	Book / Working Paper
Notes:	Number 19
Classification:	J0 - Labor and Demographic Economics. General ; J3 - Wages, Compensation, and Labor Costs ; H1 - Structure and Scope of Government
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005824135