Self-fulfilling labor wedge fluctuations and unemployment insurance
Seminar
ECONOMIC HISTORY AND POLITICAL ECONOMY SEMINAR
This event has now finished.
Event date
Monday 15 May 2023, 1pm to 2pm
Location
A/D271 (above Alcuin Porters Lodge)
Audience
Open to staff, students (postgraduate researchers only)
Admission
Free admission, booking not required
Event details
Speaker: Paulo Santos Monteiro (UoY)
Abstract: We study unemployment insurance within an equilibrium business cycle model with labor search frictions, endogenous participation, and involuntary unemployment. The model yields an endogenous countercyclical labor wedge that may generate self-fulfilling fluctuations. We show that unemployment insurance makes local indeterminacy less pervasive and, therefore, is a powerful automatic stabilizer. In calibrated versions of the model, indeterminacy occurs for replacement rates that are empirically plausible for North America, but not for the replacement rates observed for European countries.
All are welcome! Please join us if you can!