Why unemployment insurance might not only be good for the soul, it might also be good for the economy

Research output: Contribution to journalReview articlepeer-review

14 Citations (Scopus)

Abstract

Contrary to the conventional view that unemployment insurance serves to directly increase the rate of unemployment as well as reducing an economy's competitiveness by increasing the market wage of labor, the argument presented in this paper is that this worldview critically depends on unrealistic behavioral assumptions. A more realistic modeling suggests that unemployment rates need not rise and competitiveness need not deteriorate with the introduction of or improvements in unemployment insurance, which can also induce increases in economic efficiency. These analytical predictions are consistent with the empirics of unemployment insurance. Unemployment insurance can therefore protect the unemployed without damaging the economy.

Original languageEnglish
Pages (from-to)517-541
Number of pages25
JournalReview of Social Economy
Volume62
Issue number4
DOIs
Publication statusPublished - Dec 2004

Keywords

  • Bargaining power
  • Competition
  • Unemployment insurance
  • Wellbeing
  • X-efficiency

Fingerprint

Dive into the research topics of 'Why unemployment insurance might not only be good for the soul, it might also be good for the economy'. Together they form a unique fingerprint.

Cite this