Does Incomplete Take-up Matter? The Case of Unemployment Insurance by Luís Guimarães

Join us for this weeks Macroeconomics Research Seminar, Autumn Term 2024.

Luís Guimarães, from Queen's University Belfast, will present this weeks Macroeconomics seminar on Does Incomplete Take-up Matter? The Case of Unemployment Insurance.

Abstract

Only a few of the eligible take up Unemployment Insurance (UI). Yet, the literature typically disregards take-up, assuming it is costless and complete. Using a general equilibrium model with incomplete markets, we show that accounting for incomplete take-up substantially lowers UI's welfare impact in the US. In its current setup, we also find that UI reduces welfare. Application costs are key: they lower individual net gains from UI to the extent that they fail to outweigh the program's aggregate distortions. Suitably reformed, UI could slightly increase welfare. A flat transfer of 10% of the average wage for six months would foster the self-selection of the needy, reducing application costs, and enhancing redistribution and efficiency. Such a UI would bring the US system closer to that in the UK.

  
This seminar will be held on campus in 5B.307 at 1.30pm on Tuesday, 19 November 2024. This event is open to all levels of study and is also open to the public. To register your place, please contact the seminar organisers.

This event is part of the Macroeconomics Research Seminar Series.