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 language | English |
|---|---|
| Pages (from-to) | 517-541 |
| Number of pages | 25 |
| Journal | Review of Social Economy |
| Volume | 62 |
| Issue number | 4 |
| DOIs | |
| Publication status | Published - Dec 2004 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 8 Decent Work and Economic Growth
Keywords
- Bargaining power
- Competition
- Unemployment insurance
- Wellbeing
- X-efficiency
ASJC Scopus subject areas
- Economics and Econometrics
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