Working Paper: NBER ID: w4411
Authors: Andrew Atkeson; Patrick J. Kehoe
Abstract: We study the general equilibrium effects of social insurance on the transition in a model in which the process of moving workers from matches in the state sector to new matches in the private sector takes time and involves uncertainty. We find that adding social insurance may slow transition. When there are incentive problems in this rematching process, the optimal social insurance scheme may involve forced layoffs and involuntary unemployment.
Keywords: Social Insurance; Transition; General Equilibrium
JEL Codes: H55; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Complete social insurance (H55) | Slower transition (P27) |
| Incentive-compatible social insurance (G52) | Forced layoffs and involuntary unemployment (J65) |
| Complete social insurance (H55) | Discouraged effort in seeking new employment (J65) |
| Incentive-compatible social insurance (G52) | Slower transition (P27) |