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Employment turnover and the public allocation of unemployment insurance

Rodriguez Mora, J.V. and Hassler, J. (1999) Employment turnover and the public allocation of unemployment insurance Journal of Public Economics, 73, (1), pp. 55-83. (doi:10.1016/S0047-2727(99)00004-3).

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Unemployment benefits are higher and turnover between unemployment and employment is lower in Europe than in the U.S. We model the political determination of the unemployment insurance to explain these differences. We show that saving and borrowing is a good substitute for unemployment insurance when turnover is high. With high turnover, the median voter thus prefers low unemployment insurance. With low turnover, generous unemployment insurance becomes more valuable. If the median voter cannot bind future voters, the voting cycle must, however, be long in order to support a high level of insurance. Endogenizing turnover produces the possibility of multiple political equilibria.

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Published date: 1999


Local EPrints ID: 39709
PURE UUID: 701dedac-88d9-4419-8b90-5561f6d02011

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Date deposited: 01 Aug 2006
Last modified: 17 Jul 2017 15:35

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Author: J.V. Rodriguez Mora
Author: J. Hassler

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