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Unemployment Insurance and the Role of Self-Insurance

Atila Abdulkadiroglu, Burhanettin Kuruscu () and Aysegul Sahin ()
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Atila Abdulkadiroglu: Columbia University

Review of Economic Dynamics, 2002, vol. 5, issue 3, 681-703

Abstract: This paper employs a dynamic general equilibrium model to design and evaluate long-term unemployment insurance plans (plans that depend on workers' unemployment history) in economies with and without hidden savings. We show that optimal benefit schemes and welfare implications differ considerably in these two economies. Switching to long-term plans can improve welfare significantly in the absence of hidden savings. However, wefare gains are much lower when we consider hidden savings. Therefore, we argue that switching to long term plans should not be a primary concern from a policy point of view. (Copyright: Elsevier)

Keywords: Unemployment insurance; self-insurance; asymmetric and private information (search for similar items in EconPapers)
JEL-codes: D82 J65 (search for similar items in EconPapers)
Date: 2002
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DOI: 10.1006/redy.2002.0159

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