Unemployment Insurance under Moral Hazard and Limited Commitment: Public vs Private Provision

Jonathan Thomas and Timothy Worrall

Public Economics from University Library of Munich, Germany

Abstract: This paper analyses a model of private unemployment insurance under limited commitment and a model of public unemployment insurance subject to moral hazard in an economy with a continuum of agents and an infinite time horizon. The dynamic and steady-state properties of the private unemployment insurance scheme are established. The interaction between the public and private unemployment insurance schemes is examined. Examples are constructed to show that for some parameter values increased public insurance can reduce welfare by crowding out private insurance more than one-to-one and that for other parameter values a mix of both public and private insurance can be welfare maximising.

Keywords: Social Insurance; Moral Hazard; Limited Commitment; Unemployment Insurance; Crowding Out (search for similar items in EconPapers)
JEL-codes: D61 H31 H55 J65 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2002-11-05
New Economics Papers: this item is included in nep-dge, nep-ias and nep-pbe
Note: Type of Document - pdf; prepared on pc; pages: 35
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https://econwpa.ub.uni-muenchen.de/econ-wp/pe/papers/0211/0211002.pdf (application/pdf)

Related works:
Working Paper: Unemployment Insurance under Moral Hazard and Limited Commitment: Public vs Private Provision (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwppe:0211002

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