Unemployment Insurance and the Role of Self-Insurance

Journal Article

This paper employs a dynamic general equilibrium model to design and evaluate long-term unemployment insurance plans (plans that depend on workers' unemployment history) in economies with and without hidden savings. We show that optimal benefit schemes and welfare implications differ considerably in these two economies. Switching to long-term plans can improve welfare significantly in the absence of hidden savings. However, wefare gains are much lower when we consider hidden savings. Therefore, we argue that switching to long term plans should not be a primary concern from a policy point of view. (Copyright: Elsevier)

Duke Authors

Cited Authors

  • Abdulkadiroglu, A; Kuruscu, B; Sahin, A

Published Date

  • July 2002

Published In

  • Review of Economic Dynamics

Volume / Issue

  • 5 / 3

Start / End Page

  • 681 - 703