Can welfare abuse be welfare improving?

Journal article

Abstract:: I analyze quantitatively a model of labor search with unemployment insurance (UI), savings, voluntary quits and various labor attachment requirements. In particular, I study welfare consequences of a powerful reform giving UI entitlement to workers quitting their jobs voluntarily in order to search for another one. Results of the model calibrated to the US labor market show that there may be significant welfare gains associated with pursuing a generous entitlement policy for quitters as compared to the US status-quo. Moreover, I employ the assumption of monetary search costs and show that it can explain the empirically documented unemployed worker search behavior. Finally, by inducing different unemployment benefit eligibility requirements, the model identifies a concrete policy that could help us understand differences in the unemployment rate, match quality and income inequality between the US and Europe.

Files:: WA_JuneDraft.pdf

(Preview, Accepted manuscript, 1.3MB, Terms of use)

Language:: English
Keywords:: labor search

unemployment insurance

search behavior

savings

voluntary quits

FFR
Pubs id:: 1107335
Local pid:: pubs:1107335
Deposit date:: 2020-08-12

Copyright holder:: Elsevier B.V.
Notes:: This is the accepted manuscript version of the article. The final version is available online from Elsevier at: https://doi.org/10.1016/j.jpubeco.2016.07.001

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