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The Safety Net as a Springboard? A General Equilibrium based Policy Evaluation

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  • Jaimovich, Nir
  • Ferraro, Domenico
  • Molinari, Francesca
  • Young, Cristobal

Abstract

We develop a search-and-matching model where the magnitude of unemployment insurance benefits affects the likelihood that unemployed actually engage in active job search. To quan- titively discipline this relation we use administrative data of unemployed search audits. We use the model to quantify the effects of unemployment reforms. For small benefits’ increases, the policymaker faces a trade-off between an uptick in the measure of unemployed actually searching and a fall in the unemployment exit-rate conditional on searching. For larger bene- fits’ increases, an active search margin magnifies the benefits’ disincentives, leading to a bigger drop in the employment rate than previously thought.

Suggested Citation

  • Jaimovich, Nir & Ferraro, Domenico & Molinari, Francesca & Young, Cristobal, 2020. "The Safety Net as a Springboard? A General Equilibrium based Policy Evaluation," CEPR Discussion Papers 14786, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:14786
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    References listed on IDEAS

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