Date: 2022-03-25
Unemployment insurance (UI) protects individuals from the risk of earnings loss during unemployment (i.e. insurance value), but it also distorts incentives to search for jobs (i.e. moral hazard). Tzu-Ting Yang, Associate Research Fellow at Institute of Economics, Academia Sinica, and his collaborator use administrative data on the universe of unemployment spells in Taiwan from 2001 to 2011 and evaluate effects of providing a re-employment bonus and extending unemployment benefits, which is under-studied issue in previous literature. Our results suggest that the marginal value of transfers when unemployed is about two times larger than that when employed. This research has been published recently in Journal of Public Economics.
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