Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78703
Authors: 
Fredriksson, Peter
Holmlund, Bertil
Year of Publication: 
2005
Series/Report no.: 
Working Paper, IFAU - Institute for Labour Market Policy Evaluation 2005:13
Abstract: 
This paper analyses crucial design features of unemployment insurance (UI) policies. We examine three different means of improving the efficiency of UI: the duration of benefit payments, monitoring in conjunction with sanctions, and workfare. To that end we develop a quantitative model of equilibrium unemployment. The model features worker heterogeneity in preferences for leisure. The numerical analysis suggests that a system with monitoring and sanctions restores search incentives most effectively, since it brings additional incentives to search actively so as to avoid the sanction. Therefore, the UI provider can offer a more generous UI replacement rate in a system with monitoring and sanctions than in the other two systems. Workfare appears to be inferior to the other two systems.
Subjects: 
Unemployment insurance
search equilibrium
time limits
monitoring and sanctions
workfare
JEL: 
J64
J68
Document Type: 
Working Paper

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