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Working Paper 546
Back to PublicationOptimal Social Insurance, Incentives, and Transition
Andrew Atkeson - Consultant
Patrick J. Kehoe - Monetary Advisor
Published March 1, 1995
Abstract
We study 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. When there are incentive problems in this rematching process, the optimal scheme may involve forced layoffs, involuntary unemployment, and a recession.
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