Optimal Unemployment Insurance and Welfare Benefits in a Life-cycle model of Family Labor Supply and Savings

Peter Haan and Victoria Prowse

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: We specify and estimate a dynamic structural life-cycle model of labor supply, retirement and savings decisions of single-adult and couple households. Drawing on our model, we study the interplay between family labor supply and public insurance mechanisms. By including family labor supply, we recognize that the incentive effects and optimal design of public insurance programs may be impacted by a household's ability to adjust either one spouse's or both spouses' labor supply in response to wage and employment shocks. The analysis sheds new light on the optimal trade-off between insurance and incentives. In particular we show that family labor supply has quantitatively important implications for the optimal design of public insurance programs.

JEL-codes: C35 H31 J22 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-dge, nep-ias and nep-pbe
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100625

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