TY  - JOUR
AU  - Acemoglu,Daron
AU  - Shimer,Robert
TI  - Productivity Gains from Unemployment Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7352
PY  - 1999
Y2  - September 1999
UR  - http://www.nber.org/papers/w7352
L1  - http://www.nber.org/papers/w7352.pdf
N1  - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu

Robert Shimer
Department of Economics
University of Chicago
1126 East 59th Street
Chicago, IL 60637
Tel: 773/702-9015
E-Mail: shimer@uchicago.edu
AB  - 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.
ER  -