Publication Type

Journal Article

Publication Date

8-1983

Abstract

The influence of unemployment insurance on wage and layoff behavior is analyzed in the context of optimal labor contracts. Responses of contract terms to changes in economic parameters are shown to depend in general on the nature of the initial contract, the degree of workers' risk aversion, and the resolution of bargaining conflict. Layoffs are not necessarily reduced by an increase in experience rating or a reduction in the UI benefit. Product demand fluctuations tend to induce procyclical employment fluctuations but not wage fluctuation. An implication of optimal contracts with private insurance suggests a reason for government intervention in UI provision. © 1983.

Discipline

Labor Economics

Research Areas

Applied Microeconomics

Publication

Journal of Public Economics

Volume

21

Issue

3

First Page

325

Last Page

357

ISSN

0047-2727

Identifier

10.1016/0047-2727(83)90002-6

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

https://doi.org/10.1016/0047-2727(83)90002-6

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