Torben M. Andersen

Business Cycle Dependent Unemployment Insurance

Publikation: Working paperForskning

Dokumenter

  • Wp10 16

    Forlagets udgivne version, 304 KB, PDF-dokument

  • Institut for Økonomi
The consequences of business cycle contingencies in unemployment insurance systems are considered in a search-matching model allowing for shifts between "good" and "bad" states of nature. We show that not only is there an insurance argument for such contingencies, but there may also be an incentive argument. Since benefits may be less distortionary in a recession than a boom, it follows that counter-cyclical benefits reduce average distortions compared to state independent benefits. We show that optimal (utilitarian) benefits are counter-cyclical and may reduce the structural (average) unemployment rate, although the variability of unemployment may increase.
OriginalsprogEngelsk
UdgivelsesstedAarhus
UdgiverInstitut for Økonomi, Aarhus Universitet
Antal sider37
StatusUdgivet - 2010

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