Moral hazard, optimal unemployment insurance, and experience rating
نویسندگان
چکیده
This paper is concerned with evaluating alternative unemployment insurance (UI) schemes in a dynamic economy with moral hazard. We consider changes in the size and duration of UI benefits, and the effects of experience rating, and use a dynamic contracting approach to determine a benchmark optimal allocation. Radical changes in the current UI system increase welfare, but not by much. A move to full experience rating has distributional effects, but the aggregate effects are negligible. r 2002 Elsevier Science B.V. All rights reserved. JEL classification: D82; J64; J65
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