Part-Time Unemployment and Optimal Unemployment Insurance
2011 (English)Report (Other academic)
A significant fraction of the labor force consists of employed workers who are part-time unemployed (underemployed) in the sense that they are unable to work as much as they prefer. This paper develops a search and matching model to study the design of optimal unemployment insurance in an economy with unemployment as well aspart-time unemployment. Part-time unemployment provides income insurance and serves as a stepping stone to full-time jobs. Unemployment benefits for part-timers increase the outflow from unemployment to part-time work but reduce the out flow from part-time work to fulltime employment. We examine the optimal structure of benefits for unemployed and underemployed workers. The results indicate nonnegligible welfare gains associated with time limits for unemployment benefits as well as for part-time benefits. The welfare gains from optimal UI are larger when wages are fixed than when they are flexible.
Place, publisher, year, edition, pages
Uppsala: Department of Economics, Uppsala University , 2011. , 32 p.
Working paper / Department of Economics, Uppsala University (Online), ISSN 1653-6975 ; 2011:4
Job search, part-time unemployment, unemployment
Research subject Economics
IdentifiersURN: urn:nbn:se:uu:diva-148458OAI: oai:DiVA.org:uu-148458DiVA: diva2:402197