Does unemployment insurance crowd out home production?

Taskin, Temel (2012): Does unemployment insurance crowd out home production?

Abstract

In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on the relationship between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data of the U.S. The empirical results suggest that moving to a two times more generous state would decrease time spent on home production about 20% for unemployed. Then we pursue a quantitative assessment using a dynamic competitive equilibrium model in which households do home production as well as market production. The model is able to generate the empirical facts regarding unemployment benefits and home production. The fact that unemployment insurance benefits crowd out home production is interpreted as a substitution between the two insurance mechanisms against loss of earnings during unemployment spells.

• Item Type: MPRA Paper
• Language: English
• Keywords: Unemployment insurance, home production, public insurance, self insurance, heterogeneous agents models
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D13 - Household Production and Intrahousehold Allocation; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J65 - Unemployment Insurance ; Severance Pay ; Plant Closings; D - Microeconomics > D9 - Intertemporal Choice > D91 - Intertemporal Household Choice ; Life Cycle Models and Saving; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth

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