Social insurance and transition

Andrew Atkeson, Patrick J. Kehoe

Research output: Contribution to journalArticle

24 Scopus citations

Abstract

We study the general equilibrium effects of social insurance on transition in a model in which the process of moving workers from matches in the state sector to new matches in the private sector takes time and involves uncertainty. As might be expected, adding social insurance to an economy without any improves welfare. Contrary to standard intuition, however, adding social insurance may slow transition. We show that this result depends crucially on general equilibrium interactions of interest rates and savings under alternative market structures.

Original languageEnglish (US)
Pages (from-to)377-401
Number of pages25
JournalInternational Economic Review
Volume37
Issue number2
DOIs
StatePublished - May 1996

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