Titelaufnahme

Titel
Optimal social insurance and rising labor market risk / Tom Krebs (University of Mannheim, Federal Reserve Bank of Minneapolis and IZA), Martin Scheffel (Karlsruhe Institute of Technology) ; IZA Institute of Labor Economics
VerfasserKrebs, Tom ; Scheffel, Martin
KörperschaftForschungsinstitut zur Zukunft der Arbeit
ErschienenBonn, Germany : IZA Institute of Labor Economics, January 2019
Ausgabe
Elektronische Ressource
Umfang1 Online-Ressource (68 Seiten)
SerieDiscussion paper ; no. 12128
URNurn:nbn:de:hbz:5:2-179484 
Zugriffsbeschränkung
 Das Dokument ist öffentlich zugänglich im Rahmen des deutschen Urheberrechts.
Volltexte
Optimal social insurance and rising labor market risk [0.5 mb]
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Zusammenfassung (Englisch)

This paper analyzes the optimal response of the social insurance system to a rise in labor market risk. To this end, we develop a tractable macroeconomic model with risk-free physical capital, risky human capital (labor market risk) and unobservable effort choice affecting the distribution of human capital shocks (moral hazard). We show that constrained optimal allocations are simple in the sense that they can be found by solving a static social planner problem. We further show that constrained optimal allocations are the equilibrium allocations of a market economy in which the government uses taxes and transfers that are linear in household wealth/income. We use the tractability result to show that an increase in labor market (human capital) risk increases social welfare if the government adjusts the tax-and-transfer system optimally. Finally, we provide a quantitative analysis of the secular rise in job displacement risk in the US and find that the welfare cost of not adjusting the social insurance system optimally can be substantial.