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The Optimal Level of Unemployment Insurance

In: Modelling Unemployment Insurance

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  • Paola Potestio

    (Roma Tre University)

Abstract

A series of different problems are raised and tackled to formalize an optimal level of unemployment insurance. The issues that the models reviewed in the chapter address include the broad role of the UI system beyond the basic smoothing consumption aim; the generalization of Baily’s result; a new original decomposition of the effects of UI benefits; the relevance of age differences between unemployed workers; the relevance of the availability of financial assets to unemployed workers; the relevance of workers’ biased beliefs; the externalities produced by the action of UI and the consequent corrections of the Baily result. A clear, albeit basic, picture of the analytical developments in the individual issues is provided. Final comments are founded on the driving ideas and the essential analytical summaries of the models.

Suggested Citation

  • Paola Potestio, 2022. "The Optimal Level of Unemployment Insurance," Contributions to Economics, in: Modelling Unemployment Insurance, chapter 0, pages 15-58, Springer.
    • Handle: RePEc:spr:conchp:978-3-030-91319-9_3
    DOI: 10.1007/978-3-030-91319-9_3
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