چکیده:
This paper argues that a risk averse of workers after-tax reservation wage the difference between her reservation wage and the tax needed to fund the unemployment insurance system when liquidity constraint binds exists and it is unique. The optimality of unemployment insurance based on the responsiveness of reservation wage to unemployment benefit shows the disincentive effect، i.e. higher unemployment benefit will increase workers after tax reservation wage that will make the exit rate lower. This shows that there is a moral hazard problem. The more one tries to protect the worker against unemployment by raising unemployment benefits and funding the benefits by an employment tax، the more selective she becomes.
خلاصه ماشینی:
The optimality of unemployment insurance based on the responsiveness of reservation wage to unemployment benefit shows the disincentive effect, i.
e. higher unemployment benefit will increase workers after tax reservation wagethat will make the exit rate lower.
Job Search, Liquidity Constraint, Reservation Wage, Moral Hazard 1.
Introduction In a recent work, Shimer & Werning (2007) develop a test for the optimality of unemployment insurance based on responsiveness of reservation wages to unemployment benefits.
They argue that the after-tax reservation wage measures the well-being of unemployed workers.
They argued that the difference between reservation wage and the tax needed to fund the unemployment insurance system encodes all the relevant information about worker’s welfare; they proved this result is true fewer than two financial environments.
Reservation Wage and Unemployment Insurance.