Incomplete Unemployment Insurance under Aggregate Fluctuations

Yann Algan ()

Economics Bulletin, 2004, vol. 5, issue 12, pages 1-7

Abstract: This paper reconsiders the welfare benefit of unemployment insurance when individuals might self-insure through private savings but face aggregate fluctuations. We conclude that previous studies have under-estimated by half the average welfare gain from unemployment benefit by ignoring the aggregate price and employment uncertainty. But paradoxically enough, the poorest are less in favour of unemployment benefit when business cycles are taken into account. This result is due to favorable price effects which dominate the unemployment uncertainty.

Keywords: Inequality; Unemployment insurance; Wealth Heterogeneity (search for similar items in EconPapers)
JEL-codes: E2 D6 (search for similar items in EconPapers)
Date: 2004-06-27
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Journal Article: Incomplete Unemployment Insurance under Aggregate Fluctuations (2004)
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