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Unemployment Insurance and Workers' Mobility

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  • Jan Boone

Abstract

This paper analyses the effects of unemployment insurance (UI) in a model with two sectors where one sector is more risky than the other, in the sense that the probability of becoming unemployed is higher. With risk-averse agents it is the case that, over a range of values of UI, increasing UI increases workers' mobility from the safe to the risky sector, thereby increasing both unemployment and income.

Suggested Citation

  • Jan Boone, 2004. "Unemployment Insurance and Workers' Mobility," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(2), pages 275-293, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200406)160:2_275:uiawm_2.0.tx_2-g
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    References listed on IDEAS

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    1. Hans-Werner Sinn, 1994. "A Theory of the Welfare State," CESifo Working Paper Series 65, CESifo.
    2. Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October.
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    6. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
    7. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
    8. Barr, Nicholas, 1992. "Economic theory and the welfare state : a survey and interpretation," LSE Research Online Documents on Economics 279, London School of Economics and Political Science, LSE Library.
    9. Gruber, Jonathan, 1997. "The Consumption Smoothing Benefits of Unemployment Insurance," American Economic Review, American Economic Association, vol. 87(1), pages 192-205, March.
    10. A. B. Atkinson, 1999. "The Economic Consequences of Rolling Back the Welfare State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011719, December.
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    Cited by:

    1. Martín-Román, Ángel L., 2022. "Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect," Economic Modelling, Elsevier, vol. 110(C).
    2. Randolph Luca Bruno, 2006. "Optimal speed of transition with a shrinking labour force and under uncertainty," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 14(1), pages 69-100, March.

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    More about this item

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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