Working Paper: CEPR ID: DP9196
Authors: Konstantinos Tatsiramos; Jan C. van Ours
Abstract: With the emergence of the Great Recession unemployment insurance (UI) is once again at the heart of the policy debate. In this paper, we review the recent theoretical and empirical evidence on the labor market effects of UI design. We also discuss policy issues related to UI design, including the structure of benefits, the role of liquidity constraints and the pros and cons of a UI system in which the generosity of UI benefits is varying over the business cycle. Finally, we identify potential areas of future research.
Keywords: job search; labor market institutions; labor market policy; unemployment dynamics; unemployment insurance
JEL Codes: J64; J65; J68
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increase in UI benefits (J65) | Higher reservation wage (J31) |
| Higher reservation wage (J31) | Decrease in unemployment exit rate (J63) |
| Increase in UI benefits (J65) | Decrease in unemployment exit rate (J63) |
| Extending maximum duration of UI benefits (J65) | Longer unemployment durations (J64) |
| Job search efforts increase near benefit expiration (J68) | Longer unemployment durations (J64) |
| Higher UI benefits (J65) | Longer job search durations (C41) |
| Longer job search durations (C41) | Longer unemployment durations (J64) |