"The following proposal aims at the design and evaluation of innovative social insurance policies (DEISIP) as alternatives to current policies applied by governments in industrialized countries. The study of Social Insurance (SI) policies is motivated by the high and rapidly increasing total expenditure on SI policies in OECD countries. These expenditures have increased on average across OECD countries from 16% of GDP in 1980 to 21% in 2003 (OECD, 2007). Given these statistics, governments throughout the world are keen on either finding alternative policies to the existing ones or increasing the efficiency of current policies.
In order to address these issues the study will use Dynamic Stochastic General Equilibrium (DSGE) models with heterogeneous agents. This type of models is becoming extremely influential in macroeconomic for studies of economies that involve dynamics, uncertainty and policy design.
This proposal is composed of three sub-projects, each dealing with at least one SI policy. The unifying theme of all projects is the analysis of creative policies that have strong relevancy for economic outcomes through in-depth welfare examination. The first sub-project is Unemployment insurance over the business cycle.
In this sub-project, I will study state-dependent policies towards unemployed workers, i.e. I will allow the characteristics of the UI policy, such as the duration and the level of payments, to change over the business cycle in an optimal way.
The Second sub-project is Integration of social insurance policies.
In this sub-project, I will examine the potential for a welfare gain by integrating several SI policies, i.e. allow households to use funds saved in a specific account for a variety of purposes such as out-of-pocket health expenditures, and housing. Since the events covered by SI policies - such as illness, unemployment, and retirement age - are not perfectly correlated, there is a potential welfare gains from integration of these policies"
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