Two Equivalence Results between Unemployment Insurance and Wage Insurance
Fuente:
arXiv
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| Autor principal: | |
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| Formato: | Preprint |
| Publicado: |
2026
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| Acceso en línea: | |
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| _version_ | 1866913168281829376 |
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| author | Xia, Anchi |
| author_facet | Xia, Anchi |
| contents | In this short note, I show that in a McCall (1970) model with risk-neutral agents, a system of wage insurance combined with unemployment insurance financed by a lump-sum tax on the employed can be replicated -- in the ex ante sense -- by a system of unemployment insurance that depends on the agent's wage when last employed and a tax that depends on the agent's wage when employed. This holds with or without endogenous search when unemployed. I also show that wage insurance is not binding until the last earned wage exceeds a threshold, which may be of independent interest. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2605_28562 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Two Equivalence Results between Unemployment Insurance and Wage Insurance Xia, Anchi Theoretical Economics In this short note, I show that in a McCall (1970) model with risk-neutral agents, a system of wage insurance combined with unemployment insurance financed by a lump-sum tax on the employed can be replicated -- in the ex ante sense -- by a system of unemployment insurance that depends on the agent's wage when last employed and a tax that depends on the agent's wage when employed. This holds with or without endogenous search when unemployed. I also show that wage insurance is not binding until the last earned wage exceeds a threshold, which may be of independent interest. |
| title | Two Equivalence Results between Unemployment Insurance and Wage Insurance |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2605.28562 |