Unemployment Insurance Take-up Rates in an Equilibrium Search Model

Stéphane Auray, David Fuller and Damba Lkhagvasuren

No 2018-14, Working Papers from Center for Research in Economics and Statistics

Abstract: From 1989-2012; on average 23% of those eligible for unemployment insurance (UI) benefits in the US did not collect them. In a search model with matching frictions; private information associated with the UI non-collectors implies the market equilibrium is not Pareto optimal. The cause of the Pareto inefeciency is characterized along with the key features of collector vs. non-collector outcomes. Non-collectors transition to employment at a faster rate and a lower wage relative to the Pareto optimal arrival rates and wages. Quantitatively; this implies 1:71% welfare loss in consumption equivalent terms for the average worker; with a 3:85% loss conditional on non-collection. With an endogenous take-up rate; the unemployment rate and average duration of unemployment respond significantly slower to changes in the UI benefit level; relative to the standard model with a 100% take-up rate.

Keywords: Unemployment insurance; take-up; calibration; matching frictions; search. (search for similar items in EconPapers)
JEL-codes: E61 J32 J64 J65 (search for similar items in EconPapers)
Pages: 83 pages
Date: 2018-09-16
New Economics Papers: this item is included in nep-dge, nep-ias, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Unemployment insurance take-up rates in an equilibrium search model (2019)
Working Paper: Unemployment Insurance Take-up Rates in an Equilibrium Search Model (2018)
Working Paper: Unemployment Insurance Take-up Rates in an Equilibrium Search Model (2017)
Working Paper: Unemployment Insurance Take-up Rates in an Equilibrium Search Model (2013)
Working Paper: Unemployment Insurance Take-up Rate"s in an Equilibrium Search Model (2013)
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