Optimal Unemployment Insurance for Older Workers

Jean-Olivier Hairault, Francois Langot, Sébastien Ménard and Thepthida Sopraseuth

No 1107, CEPREMAP Working Papers (Docweb) from CEPREMAP

Abstract: This paper shows that optimal unemployment insurance contracts are age-dependent. Older workers have only a few years left on the labor market prior to retirement. This short horizon implies a more decreasing replacement ratio. However, there is a sufficiently short distance to retirement for which flat unemployment benefits can be the optimal contract. It is the result of the inability to reconcile both incentives and insurance for the soon-to-be-retired unemployed workers. We show that the unemployment benefit agency could take advantage of the retirement period to tax pensions in order to optimize the trade-off between insurance and incentives at the end of working life.

Keywords: Unemployment insurance; Retirement; Recursive contracts; Moral Hazard (search for similar items in EconPapers)
JEL-codes: C61 J64 J65 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2011-06
New Economics Papers: this item is included in nep-age, nep-bec, nep-cta, nep-dge, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
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http://www.cepremap.fr/depot/docweb/docweb1107.pdf (application/pdf)

Related works:
Journal Article: Optimal unemployment insurance for older workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal unemployment insurance for older workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal unemployment insurance for older workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2009)
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