scholarly journals Assessing the Welfare Effects of Unemployment Benefits Using the Regression Kink Design

2015 ◽  
Vol 7 (4) ◽  
pp. 243-278 ◽  
Author(s):  
Camille Landais
Keyword(s):  
Moral Hazard ◽  
Labor Supply ◽  
Unemployment Insurance ◽  
Welfare Effects ◽  
Time Profile ◽  
Unemployment Benefits ◽  
Search Effort ◽  
Benefit Level ◽  
The Us ◽  
Regression Kink Design

I show how, in the tradition of the dynamic labor supply literature, one can identify the moral hazard effects and liquidity effects of unemployment insurance (UI) using variations along the time profile of unemployment benefits. I use this strategy to investigate the anatomy of labor supply responses to UI. I identify the effect of benefit level and potential duration in the regression kink design using kinks in the schedule of benefits in the US. My results suggest that the response of search effort to UI benefits is driven as much by liquidity effects as by moral hazard effects. (JEL D82, J22, 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 The Effect of Unemployment Benefits on the Duration of Unemployment Insurance Receipt: New Evidence from a Regression Kink Design in Missouri, 2003–2013

2015 ◽  
Vol 105 (5) ◽  
pp. 126-130 ◽  
Author(s):  
David Card ◽  
Andrew Johnston ◽  
Pauline Leung ◽  
Alexandre Mas ◽  
Zhuan Pei
Keyword(s):  
Administrative Data ◽  
Unemployment Insurance ◽  
The State ◽  
Unemployment Benefits ◽  
Experimental Variation ◽  
Quasi Experimental ◽  
Duration Of Unemployment ◽  
Regression Kink Design ◽  
New Evidence

We provide new evidence on the effect of the unemployment insurance (UI) weekly benefit amount on unemployment insurance spells based on administrative data from the state of Missouri covering the period 2003-2013. Identification comes from a regression kink design that exploits the quasi-experimental variation around the kink in the UI benefit schedule. We find that UI durations are more responsive to benefit levels during the recession and its aftermath, with an elasticity between 0.65 and 0.9 as compared to about 0.35 pre-recession.

scholarly journals The Optimal Timing of Unemployment Benefits: Theory and Evidence from Sweden

2018 ◽  
Vol 108 (4-5) ◽  
pp. 985-1033 ◽  
Author(s):  
Jonas Kolsrud ◽  
Camille Landais ◽  
Peter Nilsson ◽  
Johannes Spinnewijn
Keyword(s):  
Moral Hazard ◽  
Administrative Data ◽  
Time Profile ◽  
Optimal Timing ◽  
Unemployment Benefits ◽  
Replacement Rate ◽  
Sufficient Statistics ◽  
Theoretical Literature ◽  
Unemployment Spell ◽  
Robust Framework

This paper provides a simple, yet robust framework to evaluate the time profile of benefits paid during an unemployment spell. We derive sufficient-statistics formulae capturing the marginal insurance value and incentive costs of unemployment benefits paid at different times during a spell. Our approach allows us to revisit separate arguments for inclining or declining profiles put forward in the theoretical literature and to identify welfare-improving changes in the benefit profile that account for all relevant arguments jointly. For the empirical implementation, we use administrative data on unemployment, linked to data on consumption, income, and wealth in Sweden. First, we exploit duration-dependent kinks in the replacement rate and find that, if anything, the moral hazard cost of benefits is larger when paid earlier in the spell. Second, we find that the drop in consumption affecting the insurance value of benefits is large from the start of the spell, but further increases throughout the spell. In trading off insurance and incentives, our analysis suggests that the flat benefit profile in Sweden has been too generous overall. However, both from the insurance and the incentives side, we find no evidence to support the introduction of a declining tilt in the profile. (JEL D82, E21, E24, J64, J65)

scholarly journals Urban Accounting and Welfare

2013 ◽  
Vol 103 (6) ◽  
pp. 2296-2327 ◽  
Author(s):  
Klaus Desmet ◽  
Esteban Rossi-Hansberg
Keyword(s):  
Large Population ◽  
The United States ◽  
Welfare Effects ◽  
City Size ◽  
Negative Effects ◽  
The Us ◽  
City Size Distribution ◽  
Using Data ◽  
Main Components ◽  
The City

We use a simple theory of a system of cities to decompose the determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiency and better amenities lead to larger cities but also to greater frictions through congestion and other negative effects of agglomeration. Using data on MSAs in the United States, we estimate these city characteristics. Eliminating variation in any of them leads to large population reallocations, but modest welfare effects. We apply the same methodology to Chinese cities and find welfare effects that are many times larger than those in the US. (JEL H71, O18, P25, R11, R23, R41)

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