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Redistributive unemployment benefit and taxation

journal contribution
posted on 05.05.2022, 09:18 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

AM (Accepted Manuscript)

Acceptance date

13/03/2022

ISSN

1935-1704

Language

en

Depositor

Dr Ali Moghaddasi Kelishomi. Deposit date: 3 May 2022

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