Optimal Unemployment Insurance for Older Workers

Jean-Olivier Hairault, Francois Langot, Sébastien Ménard and Thepthida Sopraseuth

No 4071, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper shows that optimal unemployment insurance contracts are age-dependent. Older workers have only a few years left on the labor market prior to retirement. This short horizon implies a more digressive replacement ratio. However, there is a sufficiently short distance to retirement for which flat unemployment benefits can be the optimal contract as the nearly retired unemployed workers rationally expect never to suffer from the punishment. This is why imposing a tax on the future job is particularly efficient in the context of older workers because the agency can now reward the job search by present employment subsidies. Moreover, we propose adopting a global approach to unemployment insurance by determining an optimal contract that integrates unemployment insurance and retirement pension systems.

Keywords: recursive contracts; retirement; unemployment insurance; moral hazard (search for similar items in EconPapers)
JEL-codes: C61 J64 J65 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2009-03
New Economics Papers: this item is included in nep-age, nep-cta, nep-dge, nep-ias and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Journal of Public Economics, 2012, 96 (5-6), 509-519

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Related works:
Journal Article: Optimal unemployment insurance for older workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal unemployment insurance for older workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal unemployment insurance for older workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2012)
Working Paper: Optimal Unemployment Insurance for Older Workers (2011)
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