NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Productivity Gains from Unemployment Insurance

Daron Acemoglu, Robert Shimer

NBER Working Paper No. 7352
Issued in September 1999
NBER Program(s):   LS   PE   EFG

This paper argues that unemployment insurance increases labor productivity by encouraging workers to seek higher productivity jobs, and by encouraging firms to create those jobs. We use a quantitative general equilibrium model to investigate whether this effect is comparable in magnitude to the standard moral hazard effects of unemployment insurance. Our model economy captures the behavior of the U.S. labor market for high school graduates quite well. When unemployment insurance becomes more generous starting from the current U.S. levels, there is an increase in unemployment similar in magnitude to the micro-estimates, but because the composition of jobs also changes, total output and welfare increase as well.

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Document Object Identifier (DOI): 10.3386/w7352

Published: Acemoglu, Daron and Robert Shimer. "Productivity Gains From Unemployment Insurance," European Economic Review, 2000, v44(7,Jun), 1195-1224. citation courtesy of

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