Unemployment Insurance under Moral Hazard and Limited Commitment: Public versus Private Provision

Jonathan Thomas and Timothy Worrall

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: This paper analyses a model of private unemployment insurance under limited commitment and a model of public unemployment insurance subject to moral hazard in an economy with a continuum of agents and an infinite time horizon. The dynamic and steady-state properties of the private unemployment insurance scheme are established.Theinteractionbetweenthepublicandprivateunemploymentinsurance schemes is examined. Examples are constructed to show that for some parameter values increased public insurance can reduce welfare by crowding out private insurance more than one-to-one and that for other parameter values a mix of both public and private insurance can be welfare maximising.

Keywords: social insurance; moral hazard; limited commitment; unemployment insurance; crowding out (search for similar items in EconPapers)
JEL-codes: D61 H31 H55 J65 (search for similar items in EconPapers)
Pages: 33
Date: 2002-10
New Economics Papers: this item is included in nep-dge, nep-mic and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://www.econ.ed.ac.uk/papers/id95_esedps.pdf

Related works:
Journal Article: Unemployment Insurance under Moral Hazard and Limited Commitment: Public versus Private Provision (2007)
Working Paper: Unemployment Insurance under Moral Hazard and Limited Commitment:Public versus Private Provision (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:95

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