Moral Hazard, Optimal Unemployment Insurance and Experience Rating

Cheng Wang and Stephen Williamson

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: This paper is concerned with evaluating alternative unemployment insurance (UI) schemes in a dynamic economy with moral hazard. We consider changes in the size and duration of UI benefits, and the effects of experience rating, and use a dynamic contracting approach to determine a benchmark optimal allocation. Radical changes in the current UI system increase welfare, but not by much. A move to full experience rating has distributional effects, but the aggregate effects are negligible.

Date: 2002-01-01
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Published in Journal of Monetary Economics 2002, vol. 49, pp. 1337-1371

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Related works:
Journal Article: Moral hazard, optimal unemployment insurance, and experience rating (2002)
Working Paper: Moral Hazard, Optimal Unemployment Insurance, and Experience Rating (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:10133

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