Optimal Unemployment Insurance and Voting

Andreas Pollak

Computational Economics from EconWPA

Abstract: The framework of a general equilibrium heterogeneous agent model is used to study the optimal design of an unemployment insurance (UI) scheme and the voting behaviour on unemployment policy reforms. In a first step, the optimal defined benefit and defined replacement ratio UI systems are obtained in simulations. Then, the question whether switching to such an optimal system from the status quo would be approved by a majority of the voters is explored. Finally, the transitional dynamics following a policy change are analysed. Accounting for this transition has an important influence on the voting outcome.

Keywords: insurance; heterogeneous agents; job search; voting; human capital (search for similar items in EconPapers)
JEL-codes: C61 D58 D78 E24 E61 J64 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-dge, nep-ias, nep-mac and nep-pol
Date: 2005-05-12
Note: Type of Document - pdf; pages: 35
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpco:0505002

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