A quantitative theory of time-consistent unemployment insurance

• 成果类型: Article
• 署名作者: Pei, Yun; Xie, Zoe
• 署名单位: State University of New York (SUNY) System; University at Buffalo, SUNY; Federal Reserve System - USA; Federal Reserve Bank - Atlanta
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2020.06.003
• 发表日期: 2021
• 关键词: Time-consistent policy; unemployment insurance; search and matching

摘要

During recessions, the U.S. government substantially increases the duration of unemployment insurance (UI) benefits through multiple extensions. Benefit extensions increase UI coverage and lead to higher average consumption of unemployed workers, but the expectation of an extension may reduce unemployed worker's job search incentives and lead to higher future unemployment. We show that benefit extensions in recessions arise naturally when the government forgoes prior commitment and makes discretionary UI policies. We endogenize a time-consistent non-commitment UI policy in a stochastic equilibrium search model, and use the model to quantitatively evaluate the benefit extensions implemented during the Great Recession. Switching to the (Ramsey) commitment policy would reduce the unemployment by 2.9 percentage points with small welfare gains. (C) 2020 Elsevier B.V. All rights reserved.