Optimal unemployment insurance design: Time limits, monitoring, or workfare

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2005:13

Classification and Topics

• Classification: Wirtschaft ; Unemployment: Models, Duration, Incidence, and Job Search ; Mobility, Unemployment, and Vacancies: Public Policy
• Subject: Unemployment insurance ; search equilibrium ; time limits ; monitoring and sanctions ; workfare ; Arbeitslosenversicherung ; Aktivierende Sozialhilfe ; Arbeitsuche ; Ökonomischer Anreiz ; Schweden

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fredriksson, Peter ; Holmlund, Bertil
• Event: Veröffentlichung
• (who): Institute for Labour Market Policy Evaluation (IFAU)
• (where): Uppsala
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/78703
• Last update: 10.03.2025, 11:44 AM CET