Munich Personal RePEc Archive

Optimal State-Contingent Unemployment Insurance

Sanchez, Juan M. (2006): Optimal State-Contingent Unemployment Insurance.

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Since the probability of finding a job is affected not only by individual effort but also by the aggregate state of the economy, designing unemployment insurance payments conditional on the business cycle could be valuable. This paper answers a fundamental question related to this issue: How should the payments vary with the aggregate state of the economy?

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