The Optimal Payment of Unemployment Insurance Benefits over Time

@article{Shavell1979TheOP,
  title={The Optimal Payment of Unemployment Insurance Benefits over Time},
  author={Steven Shavell and Laurence Weiss},
  journal={Journal of Political Economy},
  year={1979},
  volume={87},
  pages={1347 - 1362}
}
The primary purpose of unemployment insurance (U.I.) is no doubt to insure individuals against loss of wage income. However, U.I. is commonly believed to adversely affect job search behavior and to lengthen the duration of unemployment. With these issues in mind, this paper asks how U.I. benefits ought to be paid out over time. Specifically, the paper uses a theoretical model to determine characteristics of the time sequence of benefits that maximizes the expected utility of the unemployed… 
View on U Chicago Press
cowles.yale.edu
435 Citations
Highly Influential Citations
39
Background Citations
180
Methods Citations
31
Results Citations
14

435 Citations

Finite duration of unemployment insurance, reservation wages and participation in the job market
Optimal Unemployment Insurance and Employment History
In existing unemployment insurance programmes, it is standard to condition eligibility on the previous employment record of unemployed workers. The purpose of this article is to study conditions…
Optimal unemployment insurance: a guide to the literature
Unemployment insurance has been the subject of numerous theoretical and empirical studies. These studies elucidate the benefits and the cost of unemployment insurance, namely, the improved allocation…
The Consumption Smoothing Benefits of Unemployment Insurance
Previous research on unemployment insurance (UI) has focused on the costs of the program, in terms of the distorting effects of generous UI benefits on worker and firm behavior. For assessing the…
Should Unemployment Benefits Be Related to Previous Earnings?
  • B. Heer
  • Economics
    SSRN Electronic Journal
  • 2002
In most OECD countries, unemployment benefits are tied to individual previous labor earnings. We study the progressivity of this indexation with regard to its effects on employment, output, and…
Fair Pricing of Unemployment Insurance Premiums
The unemployment insurance (UI) system in the United States differs from a standard competitive insurance market in at least two ways. First, because workers and firms can influence the probability…
Duration-Dependent Unemployment Insurance Payments and Equilibrium Unemployment
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…
Efficiency Aspects of the Financing of Unemployment Insurance and Other Government Expenditure
This paper argues that if the disincentive effects of unemployment insurance result from higher reservation wages, they may be eliminated by financing benefits with a progressive income tax. The…
Optimal Unemployment Insurance in Search Equilibrium
Should unemployment benefits be paid indefinitely at a fixed rate or should the rate decline (or increase) over a worker’s unemployment spell? We examine these issues using an equilibrium model of…
Unemployment Insurance and the Role of Self-Insurance
This paper employs a dynamic general equilibrium model to design and evaluate long-term unemployment insurance plans (plans that depend on workers' unemployment history) in economies with and without…
...
...

References

SHOWING 1-10 OF 12 REFERENCES
The Impact of Unemployment Insurance on Job Search
WHETHER OR NOT a long-run tradeoff exists between unemployment and inflation, there seems to be little politically acceptable opportunity, except in the short run, to buy employment at the cost of…
UNEMPLOYMENT COMPENSATION: ADVERSE INCENTIVES AND DISTRIBUTIONAL ANOMALIES
The current system of unemployment compensation entails very strong adverse incentives. For a wide variety of "representative" unemployed workers, unemployment benefits replace more than 60 per cent…
Unemployment Insurance as Insurance for Workers
Discusses the application of unemployment insurance (UI) as an insurance policy for workers. Impact of UI on unemployment; Basic model optimal insurance; Details of UI tax and benefit rates.…
On Moral Hazard and Insurance
TLDR
This paper focuses on the part of moral hazard when care is not observed by the insurer and the role of the insurer in this situation.
Unemployment Insurance and Labor Supply Decisions
Symposium on the Economics of Unemployment Insurance
  • Indus. Labor Relations Rev
  • 1977
On tloral Hazard anti Insurance Q: 1. k;:'con.. forthcoming
  • On tloral Hazard anti Insurance Q: 1. k;:'con.. forthcoming
Unemployment Conipensation: Adverse Incentives and Distributional AnomaliesTemporar) Lavoffs and the Theory of Unenlploy~nent
  • LYat. Tax J. J.P.E
  • 1974
Unemployment Conipensation: Adverse Incentives and Distributional Anomalies." LYat
  • FeltLstein,
  • 1974
" Unemployment Insurance and Labor Supply Decisions . " Symposium on the Economics of Unemployment Insurance , Indus
  • Labor Relations Rev
  • 1977
...
...