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Title:Optimal unemployment insurance for older workers PDF Logo
Authors:Hairault, Jean-Olivier
Langot, François
Ménard, Sébastien
Sopraseuth, Thepthida
Issue Date:2009
Series/Report no.:IZA discussion papers 4071
Abstract:This paper shows that optimal unemployment insurance contracts are age-dependent. Older workers have only a few years left on the labor market prior to retirement. This short horizon implies a more digressive replacement ratio. However, there is a sufficiently short distance to retirement for which flat unemployment benefits can be the optimal contract as the nearly retired unemployed workers rationally expect never to suffer from the punishment. This is why imposing a tax on the future job is particularly efficient in the context of older workers because the agency can now reward the job search by present employment subsidies. Moreover, we propose adopting a global approach to unemployment insurance by determining an optimal contract that integrates unemployment insurance and retirement pension systems.
Subjects:Unemployment insurance
retirement
recursive contracts
moral hazard
JEL:C61
J64
J65
Persistent Identifier of the first edition:urn:nbn:de:101:1-2009033040
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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