Coles, Melvyn and Masters, Adrian (2004) Duration-Dependent Unemployment Insurance Payments and Equilibrium Unemployment. Economica, 71 (281). pp. 83-97. DOI https://doi.org/10.1111/j.0013-0427.2004.00358.x
Coles, Melvyn and Masters, Adrian (2004) Duration-Dependent Unemployment Insurance Payments and Equilibrium Unemployment. Economica, 71 (281). pp. 83-97. DOI https://doi.org/10.1111/j.0013-0427.2004.00358.x
Coles, Melvyn and Masters, Adrian (2004) Duration-Dependent Unemployment Insurance Payments and Equilibrium Unemployment. Economica, 71 (281). pp. 83-97. DOI https://doi.org/10.1111/j.0013-0427.2004.00358.x
Abstract
This paper develops a model of equilibrium unemployment with duration-dependent unemployment insurance (UI) payments. As the government does not observe job offers, there is a moral hazard problem because the option of receiving further UI payments raises the job-seeker's value of remaining unemployment. Extending the duration of UI payments while reducing the level of payments, to hold total generosity constant, results in higher negotiated wages. Simulations suggest that a generosity neutral switch from a six-month UI scheme to a one-year scheme has small effects, but a switch to an indefinite scheme has a large impact on wages and unemployment. © The London School of Economics and Political Science 2004.
Item Type: | Article |
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Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 05 Jan 2013 16:21 |
Last Modified: | 15 Jan 2022 01:02 |
URI: | http://repository.essex.ac.uk/id/eprint/4910 |