Optimal Unemployment Insurance Requirements

Gustavo de Souza and André Victor Doherty Luduvice

No WP 2022-45, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: In the U.S., workers must satisfy two requirements to receive unemployment insurance (UI): a tenure requirement of a minimum work spell and a monetary requirement of a past minimum earnings. Using discontinuity of UI rules at state borders, we find that the monetary requirement decreases the number of employers and the share of part-time workers, while the tenure requirement has the opposite effect. In a quantitative model, the monetary requirement induce workers to search longer because low paying jobs are not covered by UI. Since it mitigates moral hazard, the optimal UI design has a high monetary requirement.

Keywords: Unemployment Insurance; UI Eligibility; Optimal UI (search for similar items in EconPapers)
JEL-codes: E24 E61 J65 (search for similar items in EconPapers)
Pages: 52
Date: 2022-04-01
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (1)

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Working Paper: Optimal Unemployment Insurance Requirements (2023)
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