Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/21116
Authors: 
Hassler, John
Rodríguez Mora, José V.
Year of Publication: 
2002
Series/Report no.: 
IZA Discussion paper series 622
Abstract: 
The issue of whether unemployment benefits should increase or decrease over the unemployment spell is analyzed in a tractable model allowing moral hazard, adverse selection and hidden saving. Analytical results show that when the search productivity of unemployed is constant over the unemployment spell, benefits should typically increase or be constant. The only exception is when there is moral hazard and no hidden saving. In general, adverse selection problems tend to generate increasing benefits, moral hazard problems constant benefits and decreasing search productivity falling benefits.
Subjects: 
unemployment insurance
moral hazard
adverse selection
JEL: 
J65
J64
E24
Document Type: 
Working Paper

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