Optimal Unemployment Insurance in Search Equilibrium

Peter Fredriksson and Bertil Holmlund ()

Working Papers from Uppsala - Working Paper Series

Abstract: Should unemployment compensation be paid indefinitely at a fixed rate or should it decline (or increase) over a worker's unemployment spell? We examine these issues using an equilibrium model of search unemployment. The model features worker-firm bargaining over wages, free entry of new jobs, and endogenous serach effort among the unemployed. The main result is that an optimal insurance program implies a declining sequence of unemployment compensation over the spell of unemployment.

Keywords: UNEMPLOYMENT; UNEMPLOYMENT INSURANCE; JOB SEARCH (search for similar items in EconPapers)
JEL-codes: D8 H21 J65 (search for similar items in EconPapers)
Pages: 33 pages
Date: 1998
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Citations: View citations in EconPapers (12)

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Journal Article: Optimal Unemployment Insurance in Search Equilibrium (2001)
Working Paper: Optimal Unemployment Insurance in Search Equilibrium (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:uppaal:1998-2

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