Optimal Unemployment Insurance Schedules


I study the optimal unemployment benefit over time, where workers can dissave assets and alter their reservation wages over the course of unemmployment. I study whether, conditional on a given level of expenditure, benefits should be flat or decline over time. Lindner and Reizer (2020) study a declining schedule in Hungary, but most countries have a flat benefit with a cliff after a certain number of weeks. A declining schedule increases the marginal incentive for job-finding, while a flat schedule distributes more to poorer individuals who have longer unemployment spells.