MARC Record from Scriblio

LEADER: 02216cam 22003017a 4500
001 2005615127
003 DLC
005 20050113075159.0
007 cr |||||||||||
008 050111s2004 mau sb 000 0 eng
010 $a 2005615127
040 $aDLC$cDLC$dDLC
050 00 $aHB1
100 1 $aChetty, Raj.
245 10 $aOptimal unemployment insurance when income effects are large$h[electronic resource] /$cRaj Chetty.
260 $aCambridge, MA :$bNational Bureau of Economic Research,$cc2004.
490 1 $aNBER working paper series ;$vworking paper 10500
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on 1/11/2005.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Studies of the consumption-smoothing benefits of unemployment insurance (UI) have found that the optimal benefit level is very small, perhaps even 0, for conventional levels of risk aversion. In this paper, I derive a formula for the optimal benefit rate in terms of income and price elasticities of unemployment durations, directly inferring risk aversion for the unemployed from their behavioral responses to UI benefits. The optimal rate of social insurance is shown to depend positively on the size of the income elasticity and negatively on the size of the substitution elasticity. I estimate these elasticities using semi-parametric hazard models and variation in UI laws across states and over time. The estimates indicate that income effects account for 70% of the effect of UI on unemployment durations, and yield an optimal replacement rate around 50% of pre-unemployment wages. These results challenge the prevailing view that social safety nets provide minimal welfare gains at a large efficiency cost"--National Bureau of Economic Research web site.
650 0 $aInsurance, Unemployment$xMathematical models.
650 0 $aIncome$xMathematical models.
710 2 $aNational Bureau of Economic Research.
830 0 $aWorking paper series (National Bureau of Economic Research : Online) ;$vworking paper no. 10500.
856 40 $uhttp://papers.nber.org/papers/w10500