Optimal unemployment insurance for older workers

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

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Abstract: At the end of working life, as well as reducing unemployment benefits, the unemployment-insurance agency could apply pension tax instead of wage tax. First, the pension tax provides greater incentives as the value of re-employment is tax-free. Second, the short job duration before retirement implies that the budgetary return and search incentives associated with the pension tax are considerable. By way of contrast, younger workers have greater search intensity and their future pension taxes are more remote and therefore more heavily-discounted: for them the wage tax is more efficient than is the pension tax. Finally, even in the special case where search intensity is zero close to retirement, perfect risk-sharing across unemployment and retirement is welfare-improving thanks to the pension tax.

Keywords: Unemployment insurance; Retirement; Recursive contracts; Moral Hazard (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-age, nep-ias and nep-pbe
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Citations: View citations in EconPapers (2)

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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 (2011)
Working Paper: Optimal Unemployment Insurance for Older Workers (2009)
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