Unemployment Insurance in a Life Cycle General Equilibrium Model with Human Capital

Nicholas Trachter, Hernán Ruffo and Facundo Piguillem

No 1046, 2012 Meeting Papers from Society for Economic Dynamics

Abstract: We evaluate the welfare gains of extending the duration and increasing the replacement ratio of the current unemployment insurance system in US. To this end, we build a general equilibrium overlapping generations model with on the job human capital accumulation. The model is able, among other things, to match the inequality of outstanding insurance in the economy (through the endogenous wealth distribution). The key features of the model are (i) agents are borrowing constraint, (ii) nding a job requires to exert (unobservable) eort, (iii) nite life span, and (iv) human capital accumulates only while the agent is employed. We nd that, respect to the class of models usually used to study this problem, the last two nobel features substantially increase the welfare gains of more unemployment insurance. The optimal policy prescribes increasing the replacement ratio up to 90% and the duration to 9 months.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2012/paper_1046.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:red:sed012:1046

Access Statistics for this paper

More papers in 2012 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().