Voluntary income sharing and the design of unemployment insurance

Dan Anderberg

    Research output: Contribution to journalArticle

    Abstract

    This paper uses a model of search unemployment to discuss the interaction between publicly provided insurance and informal insurance through voluntary income sharing, e.g., between spouses. Income sharing reduces the optimal level of public unemployment insurance. While it is always individually rational for partners to share income, the effect of voluntary income sharing on welfare will be negative unless partners can either observe each other's search behavior or are sufficiently altruistic towards each other. The model is also used to examine a family-based policy. The welfare gains from using such policy are argued to be small.

    Original languageEnglish
    Pages (from-to)71-90
    Number of pages20
    JournalJournal of Population Economics
    Volume16
    Issue number1
    DOIs
    Publication statusPublished - Feb 2003

    Keywords

    • Altruism
    • Income sharing
    • Unemployment insurance

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