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Optimal Unemployment Insurance in a Matching Equilibrium: The Role of Congestion and Thick-Market Externalities

Coles, M (2005) Optimal Unemployment Insurance in a Matching Equilibrium: The Role of Congestion and Thick-Market Externalities. UNSPECIFIED. Barcelona Graduate School of Economics Working Papers206.

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Abstract

This paper characterises optimal unemployment insurance (UI) and optimal tax policy in an equilibrium matching framework where job search effort is unobserved by the Planner. Policy design takes into account congestion externalities (greater job search effort by an individual worker reduces the re-employment rate of other competing job seekers) and thick market externalities (greater job creation rates raise the welfare of the unemployed by making it easier to find work). A key contribution is that it characterises the optimal equilibrium trade-off between higher job creation rates (via lower employment taxes) and a more generous UI program.

Item Type: Monograph (UNSPECIFIED)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 05 Jan 2013 18:06
Last Modified: 17 Aug 2017 18:04
URI: http://repository.essex.ac.uk/id/eprint/4928

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