Long, I. and Polito, V. (2014) Unemployment, crime and social insurance. SSRN. (Submitted)
Abstract
We study an individual's incentive to search for a job in the presence of random criminal opportunities. These opportunities extenuate moral hazard, as the individual sometimes commits crime rather than searching. Even when he searches, he applies less effort. We then revisit the design of optimal unemployment insurance in this environment. If the individual is more likely to remain unemployed and unpunished when he commits crime than when he searches for a job (as suggested by empirical studies), declining unemployment benefits reduce the payoff from crime relative to that from searching. Compared to the canonical models of optimal unemployment insurance, this provides a further incentive to reduce benefits over time.
Metadata
Item Type: | Article |
---|---|
Authors/Creators: |
|
Copyright, Publisher and Additional Information: | © 2014 The Author(s). |
Keywords: | Unemployment insurance; Moral hazard; Crime; Recursive contracts |
Dates: |
|
Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Department of Economics (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 15 May 2020 08:00 |
Last Modified: | 15 May 2020 08:00 |
Status: | Submitted |
Identification Number: | 10.2139/ssrn.2483912 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:160784 |