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Journal of Population Economics

, Volume 19, Issue 2, pp 391–410 | Cite as

On voters’ attitudes towards unemployment insurance subsidies across regions: a Canadian simulation

  • Stéphane Pallage
  • Christian ZimmermannEmail author
Original Paper

Abstract

The Canadian unemployment insurance program is designed to reflect the varying risk of joblessness across regions. Regions that are considered low-risk areas subsidize higher-risk ones. A region’s risk is typically proxied by its relative unemployment rate. We use a dynamic, heterogeneous-agent model calibrated to Canada to analyze voters’ preferences between a uniformly generous unemployment insurance and the current system with asymmetric generosity. We find that Canada’s unusual unemployment insurance system is surprisingly close to what voters would choose in spite of the possibilities of shirking and self-insurance through asset buildup.

Keywords

Unemployment insurance Shirking Heterogeneous agents Voting Redistribution 

JEL Classification

E24 D7 D58 J65 

Notes

Acknowledgements

We thank the participants for comments, as well as the three referees. We gratefully acknowledge financial support from FCAR/FQRSC.

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Copyright information

© Springer-Verlag 2005

Authors and Affiliations

  1. 1.CIRPÉE and Département des Sciences ÉconomiquesUniversité du Québec à MontréalMontréalCanada
  2. 2.Department of EconomicsUniversity of ConnecticutStorrsUSA

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