This article considers optimal unemployment insurance (UI) in an equilibrium matching framework where wages are determined by strategic bargaining. It compares the outcome with the standard Nash bargaining approach, which can be interpreted as union wage bargaining with an insider/outsider distortion. It also shows that a coordinated policy approach, one that chooses job creation subsidies and UI optimally, generates a much greater welfare gain than a policy that simply varies UI payments by duration.
|Original language||English (US)|
|Number of pages||30|
|Journal||Journal of Labor Economics|
|State||Published - Jan 2006|
ASJC Scopus subject areas
- Industrial relations
- Economics and Econometrics