Speaker: Dr Shu Lin Wee
Affiliation: University of Melbourne
Location: Room 112, Chamberlain Building (#35), St Lucia Campus
Abstract: This paper examines how unemployment transfers should be allocated over the business cycle. When risk-averse workers can submit multiple applications, the optimal UI policy is countercyclical. In contrast, optimal policy in a standard search model featuring one-to-one matching is procyclical. In the latter, more generous UI during a downturn discourages search effort, dampening job creation. In the former, decreased search effort aids job creation. Because firms cannot coordinate and commit to not making the same worker an offer, lower search effort by reducing the number of applications sent mitigates this coordination friction. This in turn boosts job creation incentives, supporting employment outcomes
About Macroeconomics Seminar Series
A seminar series designed specifically for macroeconomists to connect and collaborate.