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Optimal Unemployment Insurance with Program Interactions

Author

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  • Parolin, Zachary

    (Bocconi University)

  • Pignatti, Clemente

    (ILO International Labour Organization)

Abstract

We study the interaction between unemployment insurance (UI) and other social transfers exploiting state-level changes to UI generosity and data from the Survey of Income and Program Participation (1990-2013). We find that more generous UI leads to a reduction in the receipt of other public transfers. This results from a short-term decrease in the probability of receiving means-tested programs, like the Supplemental Nutrition Assistance Program, and a long-term reduction in the probability of receiving Social Security benefits. Accounting for these interactions, the optimal UI replacement rate may be 17 percentage points higher than the current rate in the US.

Suggested Citation

  • Parolin, Zachary & Pignatti, Clemente, 2024. "Optimal Unemployment Insurance with Program Interactions," IZA Discussion Papers 17095, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17095
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    References listed on IDEAS

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    More about this item

    Keywords

    unemployment insurance; social security; welfare analysis;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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