The Implications of Labor Market Heterogeneity on Unemployment Insurance Design
Serdar Birinci and
Kurt See
No 2024-026, Working Papers from Federal Reserve Bank of St. Louis
Abstract:
We digitize state-level and time-varying unemployment insurance (UI) laws on eligibility, payment amount, and payment duration and combine them with microdata to estimate UI eligibility, take-up, and replacement rates at the individual level. We document how income and wealth levels affect unemployment risk, eligibility, take-up, and replacement rates over the course of unemployment. We evaluate whether these findings are important for shaping UI policy design using a general-equilibrium incomplete-markets model with a frictional labor market that matches our empirical findings. We show that a nested model that fails to match these findings yields a substantially less generous optimal UI policy.
Keywords: unemployment insurance; fiscal policy; household behavior; job search (search for similar items in EconPapers)
JEL-codes: E24 H31 J64 J65 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2024-09-19, Revised 2024-11-18
New Economics Papers: this item is included in nep-dge, nep-ipr and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedlwp:98801
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DOI: 10.20955/wp.2024.026
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