Unemployment Insurance and Home Production

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dc.contributor.author TASKIN, Temel
dc.date.accessioned 2011-10-21T09:48:26Z
dc.date.available 2011-10-21T09:48:26Z
dc.date.issued 2011-01-01
dc.identifier.issn 1830-7728
dc.identifier.uri http://hdl.handle.net/1814/18894
dc.description This paper is a part of the author's Ph.D. thesis at the University of Rochester. en
dc.description.abstract In this paper, we incorporate home production into a quantitative model of unemployment and show that realistic levels of home production have a significant impact on the optimal unemployment insurance rate. Motivated by recently documented empirical facts, we augment an incomplete markets model of unemployment with a home production technology, which allows unemployed workers to use their extra non-market time as partial insurance against the drop in income due to unemployment. In the benchmark model, we find that the optimal replacement rate in the presence of home production is roughly 40% of wages, which is 40% lower than the no home production model’s optimal replacement rate of 65%. The 40% optimal rate is also close to the estimated rate in practice. The fact that home production makes a significant difference in the optimal unemployment insurance rate is robust to a variety of parameterizations and alternative model environments. en
dc.language.iso en en
dc.relation.ispartofseries EUI MWP en
dc.relation.ispartofseries 2011/29 en
dc.subject D13 en
dc.subject E21 en
dc.subject J65 en
dc.title Unemployment Insurance and Home Production en
dc.type Working Paper en


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