Unemployment Insurance and the Role of Self-Insurance

24 Pages Posted: 13 Sep 2010

See all articles by Atila Abdulkadiroglu

Atila Abdulkadiroglu

Duke University - Department of Economics

Burhanettin Kuruscu

University of Toronto - Department of Economics

Aysegul Sahin

Federal Reserve Bank of New York

Date Written: March 2002

Abstract

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, welfare 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.

Suggested Citation

Abdulkadiroglu, Atila and Kuruscu, Burhanettin and Sahin, Aysegul, Unemployment Insurance and the Role of Self-Insurance (March 2002). Available at SSRN: https://ssrn.com/abstract=1084524 or http://dx.doi.org/10.2139/ssrn.1084524

Atila Abdulkadiroglu (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

Burhanettin Kuruscu

University of Toronto - Department of Economics ( email )

Toronto, Ontario M5S 3G8
Canada

HOME PAGE: http://https://sites.google.com/site/bkuruscu

Aysegul Sahin

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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