Unemployment insurance fraud and optimal monitoring

David Fuller, B Ravikumar and Yuzhe Zhang ()

No 2012-024, Working Papers from Federal Reserve Bank of St. Louis

Abstract: The most prevalent incentive problem in the U.S. unemployment insurance system is that individuals collect unemployment benefits while being gainfully employed. We show how the unemployment insurance authority can efficiently use a combination of tax/subsidy and monitoring to prevent such fraud. The optimal policy monitors the unemployed at fixed intervals. Employment tax is nonmonotonic: it increases between verifications but decreases after a verification. Unemployment benefits are relatively flat between verifications but decrease sharply after a verification.

Keywords: Unemployment; Insurance (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-dge, nep-ias and nep-lab
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Unemployment Insurance Fraud and Optimal Monitoring (2015)
Working Paper: Unemployment Insurance Fraud and Optimal Monitoring (2014)
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