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- handle: 10670/1.ha6q9m
- halshs: halshs-01083459
info:eu-repo/semantics/OpenAccess
Mots-clés
idiosyncratic shocks universal basic income unemployment insurance heterogeneous agents moral hazardSujets proches
Unemployment benefits Insurance, Unemployment Unemployment compensation Fortunes Household income Personal income Family incomeCiter ce document
Alice Fabre et al., « Universal Basic Income versus Unemployment Insurance », HAL-SHS : économie et finance, ID : 10670/1.ha6q9m
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In this paper we compare the welfare effects of unemployment insurance (UI) with an universal basic income (UBI) system in an economy with idiosyncratic shocks to employment. Both policies provide a safety net in the face of idiosyncratic shocks. While the unemployment insurance program should do a better job at protecting the unemployed, it suffers from moral hazard and substantial monitoring costs, which may threaten its usefulness. The universal basic income, which is simpler to manage and immune to moral hazard, may represent an interesting alternative in this context. We work within a dynamic equilibrium model with savings calibrated to the United States for 1990 and 2011, and provide results that show that UI beats UBI for insurance purposes because it is better targeted towards those in need.