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Part-time unemployment and optimal unemployment insurance
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
Uppsala Center for Labor Studies (UCLS).
2015 (English)In: International Tax and Public Finance, ISSN 0927-5940, E-ISSN 1573-6970, Vol. 22, no 2, 201-223 p.Article in journal (Refereed) Published
Abstract [en]

A significant fraction of the labor force consists of employed workers who are part-time unemployed (underemployed) in the sense that they are unable to work as much as they prefer. This paper studies the design of optimal unemployment insurance in an economy with unemployment as well as part-time unemployment. Part-time work provides income insurance and serves as a stepping stone to full-time jobs. Unemployment benefits for part-timers reduce the outflow from part-time work to full-time employment. However, such benefits also increase the outflow from unemployment to part-time work, thereby reducing unemployment. We examine the optimal structure of benefits for unemployed and underemployed workers. The results indicate that there are welfare gains from part-time benefits. Moreover, there are welfare gains associated with time limits for unemployment benefits as well as for part-time benefits. The welfare gains from optimal insurance are larger when wages are fixed than when they are flexible.

Place, publisher, year, edition, pages
2015. Vol. 22, no 2, 201-223 p.
Keyword [en]
Job search, Part-time unemployment, Unemployment insurance
National Category
URN: urn:nbn:se:uu:diva-258830DOI: 10.1007/s10797-013-9301-0ISI: 000351135400002OAI: oai:DiVA.org:uu-258830DiVA: diva2:842918
Available from: 2015-07-23 Created: 2015-07-20 Last updated: 2015-07-23Bibliographically approved

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Holmlund, Bertil
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