Essays on quantitative implications of unemployment insurance benefits

My dissertation consists of the following three chapters.;The second chapter builds a model under the assumption of infinitely-lived consumers. We find that an increase in the UI benefits has the disincentive effect of encouraging consumers to voluntarily opt out of their job offers. In our analysis, the rate of voluntary unemployment shows some degree of sensitivity with respect to the level of UI benefits, where small increases in the UI benefits lead to a significant rise in the voluntary unemployment rate. In the first instance, a higher voluntary unemployment rate makes it necessary for the government to levy a higher tax on the working population, which in turn deteriorates the social welfare. On the other hand, consumers tend to save less if they can receive a comparatively larger amount of UI benefits when they are separated from their jobs, which generates a lower per capita output due to the declines in both labor supply and capital input.;The last chapter involves a model with finitely-lived consumers. We analyze the quantitative effects of the UI benefits on the unemployment rate, social welfare, savings as well as output. Consumers are assumed to be eligible for the UI benefits in a given period if they worked in the previous period. The model predicts strong disincentive effects on people's will to accept job offers under higher UI benefits. The social welfare is improving when the replacement ratios increase from 45 percent to 55 percent, which represent the UI systems in the U.S. and Canada respectively. Tax increases for supporting the increase in replacement ratios are relatively small. Under a more generous UI scheme, consumers choose to save less and then receive a lower per capita income.;The first chapter provides the motivation for this thesis. Specifically, we want to answer to what extent the institutional difference between Canada and the U.S. can explain the differential between these two countries' average unemployment rates. The institution is the unemployment insurance (called UI thereafter) system.