Optimal Unemployment Insurance in Search Equilibrium

Peter Fredriksson and Bertil Holmlund ()

No 1998:2, Working Paper Series from Uppsala University, Department of Economics

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 search 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. Numerical calibrations of the model suggest that there are non-trivial welfare gains associated with switching from an optimal uniform benefit structure to an optimally differentiated system.

Keywords: Job search; Unemployment; Unemployment insurance (search for similar items in EconPapers)
JEL-codes: D83 H21 J65 (search for similar items in EconPapers)
Pages: 33 pages
Date: 1998-01-19
New Economics Papers: this item is included in nep-dge, nep-ltv, nep-mic, nep-pbe and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published in Journal of Labor Economics, 2001, pages 370-399.

Downloads: (external link)
http://www.nek.uu.se/faculty/holmlund/OptUI_992.pdf Revised version (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.nek.uu.se/faculty/holmlund/OptUI_992.pdf [301 Moved Permanently]--> https://www.nek.uu.se/faculty/holmlund/OptUI_992.pdf [301 Moved Permanently]--> https://www.uu.se/institution/nationalekonomiska/faculty/holmlund/OptUI_992.pdf)
http://www.nek.uu.se/pdf/1998wp2.pdf Original version (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.nek.uu.se/pdf/1998wp2.pdf [301 Moved Permanently]--> https://www.nek.uu.se/pdf/1998wp2.pdf [301 Moved Permanently]--> https://www.uu.se/institution/nationalekonomiska/pdf/1998wp2.pdf)

Related works:
Journal Article: Optimal Unemployment Insurance in Search Equilibrium (2001)
Working Paper: Optimal Unemployment Insurance in Search Equilibrium (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:1998_002

Access Statistics for this paper

More papers in Working Paper Series from Uppsala University, Department of Economics Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ulrika Öjdeby ().