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Choosing Unemployment Benefits:the Role of Adverse Selection and Moral Hazard

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  • Laura Khoury

    (Norwegian School of Economics and Business Administration - Norwegian School of Economics and Business Administration)

Abstract

Most unemployment insurance (UI) schemes mandate a single benefit schedule,while little empirical findings support this mandate. In this paper, I exploit aFrench program where workers are given a choice between two different UI sched-ules, providing an ideal setup to evaluate both moral hazard and selection intoUI. Using high-quality administrative data, I measure significant adverse selectionby relating the entitlement choice with the characteristics of the insured. Moralhazard is even larger, as shown by a fuzzy regression discontinuity design using aneligibility criterion: choosing a short schedule with higher average benefits increasesunemployment duration by six months.

Suggested Citation

  • Laura Khoury, 2021. "Choosing Unemployment Benefits:the Role of Adverse Selection and Moral Hazard," Working Papers halshs-02057137, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02057137
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02057137v2
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    References listed on IDEAS

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    Keywords

    Unemployment; Insurance design; moral hazard; adverse selection; insurance design;
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