A general formula for the optimal level of social insurance

• 成果类型: Article
• 署名作者: Chetty, Raj
• 署名单位: University of California System; University of California Berkeley; National Bureau of Economic Research
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2006.01.004
• 发表日期: 2006
• 页码: 1879-1901
• 关键词: Unemployment insurance; consumption-smoothing

摘要

In an influential paper, Baily (1978) showed that the optimal level of unemployment insurance (UI) in a stylized static model depends on only three parameters: risk aversion, the consumption-smoothing benefit of UI, and the elasticity of unemployment durations with respect to the benefit rate. This paper examines the key economic assumptions under which these parameters determine the optimal level of social insurance. I show that a Baily-type expression, with an adjustment for precautionary saving motives, holds in a general class of dynamic models subject to weak regularity conditions. For example, the simple reduced-form formula derived here applies with arbitrary borrowing constraints, durable consumption goods, private insurance arrangements, and search and leisure benefits of unemployment. (c) 2006 Elsevier B.V. All rights reserved.