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Designing a Cheaper and More Effective Unemployment Benefit System

Coles, M (1996) Designing a Cheaper and More Effective Unemployment Benefit System. UNSPECIFIED. CEPR Discussion Papers.

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Abstract

This paper describes an equilibrium labour market in which an unemployment benefit system cannot raise the average value of being unemployed in the long run. It proposes an alternative benefit system which pays generous benefit rates when unemployment is high, but pays much lower rates in booms. By targeting unemployment compensation to recessions, when being unemployed is particularly costly, this policy provides insurance equivalent to that provided by the current system. By reducing the value of remaining unemployed in booms, the benefit reduction increases wage flexibility over the cycle, which substantially reduces average unemployment.

Item Type: Monograph (UNSPECIFIED)
Uncontrolled Keywords: Insurance; Policy; Unemployment
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 05 Jan 2013 20:49
Last Modified: 17 Aug 2017 18:04
URI: http://repository.essex.ac.uk/id/eprint/4885

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