We use a dynamic general equilibrium model with heterogeneous agents to assess the quantitative effects of switching from the typical unemployment insurance programs to a system of mandatory unemployment accounts. In such system, workers contribute to a personal account from which they can withdraw, in a controlled fashion, once unemployed or retired. One of the promises of this alternative approach to unemployment benefits is its effect on moral hazard and shirking as workers are personally affected when they turn down offers. Our model is calibrated to the United States. The questions we answer are: 1) what scheme specification would be optimal from a social planner's perpective; 2) how such an optimal scheme compares to current unemployment insurance programs. |
