DP9196 Labor Market Effects of Unemployment Insurance Design

Author(s): Konstantinos Tatsiramos, Jan C. van Ours
Publication Date: October 2012
Keyword(s): Job search, Labor market institutions, Labor market policy, Unemployment dynamics, Unemployment insurance
JEL(s): J64, J65, J68
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9196

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.