Unemployment Insurance and Job Search — Real Options Approach
Date Issued
2004
Date
2004
Author(s)
Yeh, Mei-Hui
DOI
en-US
Abstract
The key insight of this paper is that unemployment insurance may serve as a good substitute for investment in waiting for the optimal job opportunities in the job search processes. The unemployment benefit releases the income pressure and hence encourages the labor to wait a better job which maximizes his future total wage utility.
This paper takes a fundamentally different method by applying real option approach to the job search processes. Job search approach is similar to buying an American call option. At each moment, an unemployed labor seems to hold an option to accept a job opportunity or to keep searching. Accepting a job opportunity is similar to early exercising the call option and keeping search is similar to holding the call. Unemployment benefits change the future wage utility of an unemployed labor. From the differences of the wage utility, the impacts of unemployment benefits are obvious.
Subjects
實質選擇權
失業保險
薪資效用
工作搜尋理論
Job Search Theory
Unemployment Insurance
Wage Utility
Real Options Approach
SDGs
Type
thesis