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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title The Safety Net as a Springboard? A General Equilibrium Based Policy Evaluation
Organization Unit
  • Domenico Ferraro
  • Nir Jaimovich
  • Francesca Molinari
  • Cristobal Young
  • English
Institution Centre for Economic Policy Research
Series Name CEPR Discussion Papers
Number 14786
ISSN 0265-8003
Number of Pages 69
Date 2020
Abstract Text We develop a search-and-matching model where the magnitude of unemployment insurance benefits affects the likelihood that unemployed actually engage in active job search. To quan- titively discipline this relation we use administrative data of unemployed search audits. We use the model to quantify the effects of unemployment reforms. For small benefits' increases, the policymaker faces a trade-off between an uptick in the measure of unemployed actually searching and a fall in the unemployment exit-rate conditional on searching. For larger bene- fits' increases, an active search margin magnifies the benefits' disincentives, leading to a bigger drop in the employment rate than previously thought.
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Keywords unemployment insurance, search behavior, costly search, liquidity effect.