TY  - JOUR
AU  - Atkeson,Andrew
AU  - Lucas,Robert E., Jr.
TI  - Effciency and Equality in a Simple Model of Unemployment Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4381
PY  - 1993
Y2  - June 1993
UR  - http://www.nber.org/papers/w4381
L1  - http://www.nber.org/papers/w4381.pdf
N1  - Author contact info:
Andrew Atkeson
Bunche Hall 9381
Department of Economics
UCLA
Box 951477
Los Angeles, CA  90095-1477
Tel: 866/312-9770
Fax: 310/825-9528
E-Mail: andy@atkeson.net

Robert E. Lucas, Jr.
Department of Economics
The University of Chicago
1126 East 59th Street
Chicago, IL  60637
Tel: 773/702-8179
Fax: 773/702-8490
E-Mail: relucas@midway.uchicago.edu
AB  - This paper describes the efficient allocation of consumption and work effort in an economy in which workers face idiosyncratic employment risk and considerations of moral hazard prevent full insurance. We impose a lower bound on the expected discounted utility that can be assigned to any agent from any date onward, and show, with this feature added, that the efficient unemployment insurance scheme induces an invariant cross sectional distribution of individual entitlements to utility. The paper thus provides a simple prototype model suited to the study of the normative question: what is the tradeoff between equality and efficiency in resource allocation?
ER  -