English, Article, Journal or magazine article edition: Equilibrium Unemployment Insurance John Hassler; José V. Rodríguez Mora; Kjetil Storesletten; ...

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Bookmark: http://trove.nla.gov.au/version/153654
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Equilibrium Unemployment Insurance
Author
  • John Hassler
  • José V. Rodríguez Mora
  • Kjetil Storesletten
  • Fabrizio Zilibotti
Physical Description
  • preprint
Notes
  • In this paper, we incorporate a positive theory of unemployment insurance into a dynamic overlapping generations model with search-matching frictions and on-the-job learning-by-doing. The model shows that societies populated by identical rational agents, but differing in the initial distribution of human capital across agents, may choose very different unemployment insurance levels in a politico-economic equilibrium. The interaction between the political decision about the level of the unemployment insurance and the optimal search behavior of the unemployed gives rise to a self-reinforcing mechanism whichmay generate multiple steady-state equilibria. In particular, a European-type steady-state with high unemployment, low employment turnover and high insurance can co-exist with an American-type steady-state with low unemployment, high employment turnover and low unemployment insurance. A calibrated version of the model features two distinct steady-state equilibria with unemployment levels and duration rates resembling those of the U.S. and Europe, respectively.
  • Comparative advantege, employment, political equilibrium, search, specialization, unemployment insurance
  • RePEc:upf:upfgen:605
Language
  • English
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