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Title: Optimal Life Cycle Unemployment Insurance

Citation Type: Journal Article

Publication Year: 2015

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Abstract: We argue that US welfare would rise if unemployment insurance were increased for younger and decreased for older workers. This is because the young tend to lack the means to smooth consumption during unemployment and want jobs to accumulate high-return human capital. So unemployment insurance is most valuable to them, while moral hazard is mild. By calibrating a life cycle model with unemployment risk and endogenous search effort, we find that allowing unemployment replacement rates to decline with age yields sizeable welfare gains to US workers.

Url: https://www.aeaweb.org/articles.php?doi=10.1257/aer.20111559

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Authors: Michelacci, Claudio; Hernan, Ruffo

Periodical (Full): American Economic Review

Issue: 2

Volume: 105

Pages: 816-859

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure, Other, Poverty and Welfare

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