Unemployment Insurance with Response Heterogeneity

Conny Wunsch and Véra Zabrodina (vera.zabrodina@unibas.ch)
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Véra Zabrodina: University of Basel

No 16509, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The generosity of social insurance coverage often increases with the beneficiary's age and their contribution time to social security, but existing policies vary considerably. We study the differentiation of unemployment insurance (UI) generosity by evaluating how the insurance-incentive trade-off varies with age and contribution time. We exploit numerous discontinuities in potential benefit duration in Germany. Contribution time in the last three years carries information on job search efforts, as it is associated with lower moral hazard responses and fiscal externality. We find no significant response heterogeneity in age or longer contribution time horizons. Contrasting these gradients with an approximated insurance value for four UI regimes, we document that steepening the potential benefit duration schedule in contribution time and flattening it in age would have increased welfare.

Keywords: policy differentiation; response heterogeneity; unemployment insurance (search for similar items in EconPapers)
JEL-codes: J08 J64 J65 (search for similar items in EconPapers)
Pages: 79 pages
Date: 2023-10
New Economics Papers: this item is included in nep-eur and nep-lab
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Related works:
Working Paper: Unemployment Insurance with Response Heterogeneity (2023)
Working Paper: Unemployment Insurance with Response Heterogeneity (2023)
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