Whether, when and how to extend unemployment benefits: Theory and application to COVID-19

• 成果类型: Article
• 署名作者: Mitman, Kurt; Rabinovich, Stanislav
• 署名单位: Stockholm University; University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2021.104447
• 发表日期: 2021
• 关键词: Unemployment insurance; optimal policy; Covid-19

摘要

We investigate the optimal response of unemployment insurance to economic shocks, both with and without commitment. The optimal policy with commitment follows a modified Baily-Chetty formula that accounts for job search responses to future UI benefit changes. As a result, the optimal policy with commitment tends to front-load UI, unlike the optimal discretionary policy. In response to shocks intended to mimic those that induced the COVID-19 recession, we find that a large and transitory increase in UI is optimal; and that a policy rule contingent on the change in unemployment, rather than its level, is a good approximation to the optimal policy. (c) 2021 Elsevier B.V. All rights reserved.