Part-Time Unemployment and Optimal Unemployment Insurance

Susanne Ek and Bertil Holmlund ()

No 5540, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A significant fraction of the labor force consists of employed workers who are part-time unemployed (underemployed) in the sense that they are unable to work as much as they prefer. This paper develops a search and matching model to study the design of optimal unemployment insurance in an economy with unemployment as well as part-time unemployment. Part-time unemployment provides income insurance and serves as a stepping stone to full-time jobs. Unemployment benefits for part-timers increase the outflow from unemployment to part-time work but reduce the outflow from part-time work to full-time employment. We examine the optimal structure of benefits for unemployed and underemployed workers. The results indicate non-negligible welfare gains associated with time limits for unemployment benefits as well as for part-time benefits. The welfare gains from optimal UI are larger when wages are fixed than when they are flexible.

Keywords: part-time unemployment; unemployment insurance; job search (search for similar items in EconPapers)
JEL-codes: J64 J65 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2011-02
New Economics Papers: this item is included in nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Published - published in International Tax and Public Finance, 2015, 22(2), 201-223

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Related works:
Journal Article: Part-time unemployment and optimal unemployment insurance (2015)
Working Paper: Part-Time Unemployment and Optimal Unemployment Insurance (2011)
Working Paper: Part-Time Unemployment and Optimal Unemployment Insurance (2011)
Working Paper: Part-Time Unemployment and Optimal Unemployment Insurance (2011)
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