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Redistributive unemployment benefit and taxation

journal contribution
posted on 21.06.2022, 09:00 authored by Homa Esfahanian, Ali Moghaddasi-KelishomiAli Moghaddasi-Kelishomi

This paper suggests a simple rule which identifies the coordination between optimal unemployment benefits paid and the tax system in the case of risk neutral workers but with moral hazard and hidden information on the worker’s type. Our model posits that, given a universal, linear income tax scheme, the optimal unemployment benefits paid does not depend on workers’ types. Standard government policy pays a positive replacement rate to unemployed workers. Optimal redistribution, taking moral hazard and adverse selection into account, instead suggests that the benefit paid should be the same for all and only depends on the underlying tax structure.

History

School

  • Business and Economics

Department

  • Business

Published in

The B.E. Journal of Theoretical Economics

Publisher

De Gruyter

Version

VoR (Version of Record)

Rights holder

© Walter de Gruyter GmbH, Berlin/Boston

Publisher statement

This paper was published in the journal The B.E. Journal of Theoretical Economics and is available at https://doi.org/10.1515/bejte-2021-0049. The final publication is available at www.degruyter.com

Acceptance date

13/03/2022

Publication date

2022-06-13

Copyright date

2022

ISSN

1935-1704

Language

en

Depositor

Dr Ali Moghaddasi Kelishomi. Deposit date: 3 May 2022

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