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On Voters' Attitudes Towards Unemployment Insurance Subsidies across Regions: A Canadian Simulation

Stephane Pallage () and Christian Zimmermann ()

No 2004-34, Working papers from University of Connecticut, Department of Economics

Abstract: The Canadian unemployment insurance program is designed to reflect the varying risk of joblessness across regions. Regions that are considered low-risk areas subsidize higher risk ones. A region's risk is typically proxied by its relative unemployment rate. We use a dynamic, heterogeneous-agent model calibrated to Canada to analyze voters preferences between a uniformly generous unemployment insurance and the current system with asymmetric generosity. We find that Canada's unusual unemployment insurance system is surprisingly close to what voters would choose in spite of the possibilities of moral hazard and self-insurance through asset build-up.

Keywords: Unemployment insurance; moral hazard; shirking; heterogeneous agents; voting; redistribution. (search for similar items in EconPapers)
JEL-codes: E24 D7 D58 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-cmp, nep-dge, nep-ias and nep-pol
Date: 2004-10
Note: This paper was presented at the 2003 meeting of the European Society for Population Economics at NYU, the 2003 Montreal Macro Workshop, the 2003 meeting of the Society for Economic Dynamics in Paris, and the Midwest Macro Conference at Iowa State University. We gratefully acknowledge financial support from FCAR/FQRSC.
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Journal Article: On voters’ attitudes towards unemployment insurance subsidies across regions: a Canadian simulation (2006) Downloads
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Handle: RePEc:uct:uconnp:2004-34