讲座：Investigation of a Sufficient Statics for Unemployment Insurance: A General Equilibrium Analysis 发布时间：2023-05-16
题 目：Investigation of a Sufficient Statics for Unemployment Insurance: A General Equilibrium Analysis
嘉 宾：Ji-Woong Moon，助理教授，上海财经大学
How quantitatively significant are general equilibrium effects when characterizing optimal un employment insurance (UI) benefits? We answer this question by building a general equilibrium model with incomplete financial markets and labor market frictions. In our model, firms make decisions on entry; households make efforts to search for a job and save assets as partial insurance against unemployment and persistent labor productivity shocks. We align the model so that the Baily-Chetty formula is satisfied with the model-implied micro elasticity of unemployment duration but not under general equilibrium effects. We find that the response of the equilibrium interest rate to UI benefits is extremely small. Therefore, the optimal UI level is close to that meeting the Baily-Chetty formula (- 7 percent), and compared to the UI induced by the Baily-Chetty formula, the optimal UI shows minuscule improvements in welfare (0.0015 percent in consumption). The stagnant change in the equilibrium interest rate is because an increase in UI benefits produces two offsetting forces: a reduction in households’ precautionary savings due to more insurance and a decrease in firms’ capital demand due to more unemployment. These findings suggest that the sufficient statistics approach with the Baily-Chetty formula provides a good approximation for the optimal UI benefits.
Ji-Woong Moon has been an Assistant Professor of Economics at SUFE since 2020 after graduating from Penn State University. He works on macroeconomics and labor economics and has published in the Journal of Monetary Economics.