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Productivity Gains From Unemployment Insurance (1999)
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@MISC{Acemoglu99productivitygains,
author = {Daron Acemoglu and Robert Shimer},
title = {Productivity Gains From Unemployment Insurance},
year = {1999}
}
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Abstract
This paper argues that unemployment insurance increases labor productivity by encouraging workers to seek higher productivity jobs, and by encouraging firms to create those jobs. We use a quantitative model to investigate whether this e#ect is comparable in magnitude to the standard moral hazard e#ects of unemployment insurance. Our model economy captures the behavior of the U.S. labor market for high school graduates quite well. With unemployment insurance more generous than the current U.S. level, unemployment would increase by a magnitude similar to the micro-estimates; but because the composition of jobs also changes, total output and welfare would increase as well. Keywords: e#ciency, risk-aversion, search, unemployment insurance, consumption smoothing JEL Classification: D83, J64, J65. # This paper was prepared for the International Seminar on Macroeconomics 1999. Thanks to seminar participants there, at the Federal Reserve Bank of Cleveland, the London Business School, the New York Area Macro Workshop, Pennsylvania, Princeton, and the NBER Summer Institute, and to Gadi Barlevy, Olivier Blanchard, Charles Bean, Robert Gordon, Jonathan Gruber, Per Krusell, Dale Mortensen, James Poterba, two anonymous referees, and the editor for comments. + Corresponding Author: 204 Fisher Hall, Princeton University, Princeton, NJ 08544, United States. Phone: 609-258-4031. Fax: 609-258-6419. Email: shimer@princeton.edu 1
Keyphrases
unemployment insurance jel classification gadi barlevy dale mortensen anonymous referee high school graduate princeton university robert gordon standard moral hazard ect olivier blanchard unemployment insurance increase labor productivity u.s. labor market model economy encouraging firm current u.s. level nber summer institute total output per krusell quantitative model new york area macro workshop charles bean federal reserve bank productivity job london business school jonathan gruber fisher hall united state international seminar james poterba
