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Optimal Unemployment Insurance in a Matching Equilibrium

Masters, Adrian and Coles, Melvyn (2004) Optimal Unemployment Insurance in a Matching Equilibrium. Working Paper. University at Albany, SUNY, Department of Economics Discussion Papers 04-12, Department of Economics.

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Abstract

This paper considers the optimal design of unemployment insurance (UI) within an equilibrium matching framework when wages are determined by strategic bargaining. Unlike the Nash bargaining approach, reducing UI payments with duration is welfare increasing. A co-ordinated policy approach, however, one that chooses job creation subsidies and UI optimally, implies a much greater welfare gain than one which considers optimal UI alone. Once job creation subsidies are chosen optimally, the welfare value of making UI payments duration dependent is small.

Item Type: Monograph (Working Paper)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 05 Jan 2013 19:16
Last Modified: 05 Jan 2013 19:16
URI: http://repository.essex.ac.uk/id/eprint/4904

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