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Efficient Unemployment Insurance / Daron Acemoglu, Robert Shimer.
- Format:
- Book
- Author/Creator:
- Acemoglu, Daron.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w6686.
- NBER working paper series no. w6686
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 1998.
- Summary:
- This paper constructs a tractable general equilibrium model of search with risk-aversion. An increase in risk-aversion reduces wages, unemployment, and investment. Unemployment insurance (UI) has the reverse effect due to market generated moral hazard: insured workers seek high wage jobs with high unemployment risk. An economy with risk-neutral workers achieves maximal output without any UI. In contrast, in an economy with risk-averse workers, a positive level of UI maximizes output. Therefore, moderate UI not only improves risk-sharing, but also increases output.
- Notes:
- Print version record
- August 1998.
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