Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/196652 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12154
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Central to the welfare analysis of income transfer programs is the deadweight loss associated with possible reforms. To aid analytical tractability, its measurement typically requires specifying a simplified model of behavior. We employ a complementary "decomposition" approach that compares the behavioral and mechanical components of a policy's total impact on the government budget to study the deadweight loss of two unemployment insurance policies. Experimental and quasi-experimental estimates using state administrative data show that increasing the weekly benefit is more efficient (with a fiscal externality of 53 cents per dollar of mechanical transferred income) than reducing the program's implicit earnings tax.
Subjects: 
behavioral and mechanical effects
decomposition
sufficient statistics
optimal unemployment insurance
partial unemployment insurance
unemployment insurance
regression kink design
deadweight loss
fiscal externality
JEL: 
C14
C20
C31
H2
H23
J64
J65
J68
Document Type: 
Working Paper

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