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UID:fe680ff73a538b0ee8f73b65beee1cff
CATEGORIES:Seminars
CREATED:20150211T174408
SUMMARY:Itay Saporta Eksten - Tel Aviv University
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Job Loss, Consumption and Unemployment Insurance\nAbstract:\nIt is well kno
 wn that job loss is associated with both pre- and post-job loss declines in
  hourly wages and earnings. Using recent data from the Panel Study of Incom
 e Dynamics, I show that consumption dynamics mirror these wage dynamics. To
  account for the consumption dynamics in the data I introduce a correlation
  between individual hourly wages and job loss into a life-cycle model with 
 self insurance (through savings), social insurance, and endogenous unemploy
 ment durations. I find that this model is able to replicate the joint dynam
 ics of wages, job loss and consumption that we observe in the data. I then 
 show that accounting for the correlation between wages and job loss has imp
 ortant implications for the optimal design of unemployment insurance (UI). 
 The consumption smoothing benefits of unemployment insurance are larger, an
 d the cost of insurance lower, than suggested when this correlation is abse
 nt. Thus, while a model that assumes away these correlations yields optimal
  UI replacement rates close to zero, a model that incorporates the correlat
 ions predicts optimal rates of 0.54, slightly higher than the current US le
 vel.\n
DTSTAMP:20260421T164642Z
DTSTART:20141023T173000Z
DTEND:20141023T190000Z
SEQUENCE:0
TRANSP:OPAQUE
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