scholarly journals Unemployment Insurance Fraud and Optimal Monitoring

2015 ◽  
Vol 7 (2) ◽  
pp. 249-290 ◽  
Author(s):  
David L. Fuller ◽  
B. Ravikumar ◽  
Yuzhe Zhang
Keyword(s):  
Quantitative Analysis ◽  
Unemployment Insurance ◽  
Insurance Fraud ◽  
Unemployment Benefits ◽  
Monitoring Cost ◽  
Tax Subsidy ◽  
Optimal Monitoring ◽  
Incentive Problem ◽  
The Cost ◽  
The Unemployed

An important incentive problem for the design of unemployment insurance is the fraudulent collection of unemployment benefits by workers who are gainfully employed. We show how to efficiently use a combination of tax/subsidy and monitoring to prevent such fraud. The optimal policy monitors the unemployed at fixed intervals. Employment tax is nonmonotonic: it increases between verifications but decreases after a verification. Unemployment benefits are relatively flat between verifications but decrease sharply after a verification. Our quantitative analysis suggests that the optimal monitoring cost is 60 percent of the cost in the current US system. (JEL D82, H24, J64, J65)

scholarly journals Optimal unemployment insurance with monitoring

10.3982/qe564 ◽  
2019 ◽  
Vol 10 (2) ◽  
pp. 693-733 ◽  
Author(s):  
Ofer Setty
Keyword(s):  
Quantitative Analysis ◽  
Moral Hazard ◽  
Unemployment Insurance ◽  
Job Search ◽  
Private Information ◽  
Unemployment Benefits ◽  
Economic Forces ◽  
The Government ◽  
Monitoring Precision ◽  
Period Model

I model job‐search monitoring in the optimal unemployment insurance framework, in which job‐search effort is the worker's private information. In the model, monitoring provides costly information upon which the government conditions unemployment benefits. Using a simple one‐period model with two effort levels, I show analytically that the monitoring precision increases and the utility spread decreases if and only if the inverse of the worker's utility in consumption has a convex derivative. The quantitative analysis that follows extends the model by allowing a continuous effort and separations from employment. That analysis highlights two conflicting economic forces affecting the optimal precision of monitoring with respect to the generosity of the welfare system: higher promised utility is associated not only with a higher cost of moral hazard, but also with lower effort and lower value of employment. The result is an inverse U‐shaped precision profile with respect to promised utility.

Unemployment Insurance and Unemployment Accounts: The Best of Both Worlds

2017 ◽  
Vol 15 (6) ◽  
pp. 1302-1340 ◽  
Author(s):  
Ofer Setty
Keyword(s):  
Unemployment Insurance ◽  
Precautionary Savings ◽  
Unemployment Benefits ◽  
Insurance System ◽  
Us Economy ◽  
Savings Accounts ◽  
The Us ◽  
Unemployment Insurance System ◽  
The Unemployed ◽  
Government Benefits

Abstract Unemployment accounts are mandatory individual savings accounts that can be used only during unemployment or retirement. Unlike unemployment insurance, unemployment accounts solve the moral hazard problem but provide no public insurance to workers. I study a hybrid system that borrows from concepts of both unemployment insurance and unemployment accounts, in which workers are mandated to save when employed and can withdraw from the account when unemployed. Once the account is exhausted, the unemployed worker receives unemployment benefits. This hybrid policy provides insurance to workers more efficiently than an unemployment insurance system because it provides government benefits selectively. As a consequence, young workers can reduce their precautionary savings and better smooth their consumption over the life cycle. Calibrating the model to the US economy, I find that, relative to an optimal unemployment insurance system, the optimal hybrid policy leads to a welfare gain of 2.4%, measured as consumption equivalent variation.

scholarly journals Unemployment Insurance Fraud and Optimal Monitoring

2012 ◽  
Author(s):  
B. Ravikumar ◽  
Yuzhe Zhang ◽  
David L. Fuller
Keyword(s):  
Unemployment Insurance ◽  
Insurance Fraud ◽  
Optimal Monitoring

scholarly journals Unemployment Insurance Fraud and Optimal Monitoring

2012 ◽  
Author(s):  
B. Ravikumar ◽  
Yuzhe Zhang ◽  
David L. Fuller
Keyword(s):  
Unemployment Insurance ◽  
Insurance Fraud ◽  
Optimal Monitoring

Unemployment Insurance and the Reservation Wage of the Unemployed

1982 ◽  
Vol 64 (1) ◽  
pp. 12 ◽  
Author(s):  
Raymond P. H. Fishe
Keyword(s):  
Unemployment Insurance ◽  
Reservation Wage ◽  
The Unemployed

scholarly journals Front-Loading the Unemployment Benefit: An Empirical Assessment

2020 ◽  
Vol 12 (3) ◽  
pp. 140-174 ◽  
Author(s):  
Attila Lindner ◽  
Balázs Reizer
Keyword(s):  
Unemployment Insurance ◽  
Policy Reform ◽  
Behavioral Responses ◽  
Sharp Change ◽  
Unemployment Benefit ◽  
Unemployment Benefits ◽  
Cost Increase ◽  
Empirical Assessment ◽  
Pareto Improving

We estimate the effect of front-loading unemployment benefit payments on nonemployment duration and reemployment wages. Exploiting a sharp change in the path of benefits for those who claimed unemployment benefits after November 1, 2005 in Hungary, we show that nonemployment duration fell by two weeks, while reemployment wages rose by 1.4 percent as a result of front-loading. We show that these behavioral responses were large enough to offset the mechanical cost increase of the unemployment insurance. We argue that our results indicate that benefit front-loading was a Pareto improving policy reform as both unemployed and employed workers were made better off. (JEL D91, J31, J64, J65)

scholarly journals Optimal Stopping and Utility in a Simple Modelof Unemployment Insurance

Risks ◽  
2019 ◽  
Vol 7 (3) ◽  
pp. 94
Author(s):  
Jason S. Anquandah ◽  
Leonid V. Bogachev
Keyword(s):  
Simple Model ◽  
Unemployment Insurance ◽  
Optimal Stopping ◽  
Point Of View ◽  
Call Option ◽  
Optimal Stopping Problem ◽  
Optimal Decisions ◽  
Key Issues ◽  
The Unemployed ◽  
New Jobs

Managing unemployment is one of the key issues in social policies. Unemployment insurance schemes are designed to cushion the financial and morale blow of loss of job but also to encourage the unemployed to seek new jobs more proactively due to the continuous reduction of benefit payments. In the present paper, a simple model of unemployment insurance is proposed with a focus on optimality of the individual’s entry to the scheme. The corresponding optimal stopping problem is solved, and its similarity and differences with the perpetual American call option are discussed. Beyond a purely financial point of view, we argue that in the actuarial context the optimal decisions should take into account other possible preferences through a suitable utility function. Some examples in this direction are worked out.

Career Counseling Process Quality Promotes Reemployment

2019 ◽  
pp. 089484531988473
Author(s):  
Peter Behrendt ◽  
Anja S. Göritz ◽  
Katharina Heuer
Keyword(s):  
Career Counseling ◽  
Process Quality ◽  
Unemployment Benefits ◽  
Job Seekers ◽  
Career Intervention ◽  
Career Counselor ◽  
Counseling Process ◽  
Administrative Process ◽  
The Unemployed

One-on-one career counseling has been established as the most effective type of career intervention. Prior research results have suggested that process quality determines counseling success. In this multilevel study, career counseling process quality is validated as a predictor of job seekers’ reemployment at three Swiss job centers. Supervisors’ evaluations of the process quality of mandatory counseling sessions predicted faster reemployment of the 444 counseled job seekers by 18.9 working days on average. This effect equals yearly savings of 418 million Swiss Francs CHF (US$ 422 million) in Swiss unemployment benefits. While in many countries, the counseling of the unemployed is predominantly an administrative process, the findings should encourage investments in process quality of career counseling to promote reemployment. Furthermore, the study calls for further research on the underlying factors of career counseling process quality and the respective career counselor behaviors.

Application of Fuzzy Logic to Fraud Detection

2005 ◽  
pp. 135-139
Author(s):  
Mary Jane Lenard ◽  
Pervaiz Alam
Keyword(s):  
Financial Reporting ◽  
Average Cost ◽  
Medical Insurance ◽  
Financial Statements ◽  
Third Party ◽  
Insurance Fraud ◽  
Fraudulent Financial Reporting ◽  
The Cost ◽  
The U.S ◽  
Financial Reporting Fraud

In light of recent reporting of the failures of some of the major publicly-held companies in the U.S. (e.g., Enron & WorldCom), it has become increasingly important that management, auditors, analysts, and regulators be able to assess and identify fraudulent financial reporting. The Enron and WorldCom failures illustrate that financial reporting fraud could have disastrous consequences both for stockholders and employees. These recent failures have not only adversely affected the U.S. accounting profession but have also raised serious questions about the credibility of financial statements. KPMG (2003) reports seven broad categories of fraud experienced by U.S. businesses and governments: employee fraud (60%), consumer fraud (32%), third-party fraud (25%), computer crime (18%), misconduct (15%), medical/insurance fraud (12%), and financial reporting fraud (7%). Even though it occurred with least frequency, the average cost of financial reporting fraud was the highest, at $257 million, followed by the cost of medical/insurance fraud (average cost of $33.7 million).

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