Choice of Social Security System

Birthe Larsen, Gisela Waisman

Research output: Working paperResearchpeer-review

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This paper examines the impact of unemployment insurance and social assistance on wages, unemployment, education and inequality when educational choice and the decision to pay into an unemployment insurance fund is endogenous and when workers are heterogenous in terms of initial wealth. The higher the worker’s wealth, the lower social assistance the worker receives if unemployed. The model can help shed light on the puzzle why only some workers pay into an unemployment insurance fund as well as the relative compressed wage structure in countries with generous social assistance and unemployment insurance. We use this set up to consider whether we should as society increase social assistance or unemployment insurance, if the aim is to reduce inequality.
Original languageEnglish
Place of PublicationFrederiksberg
PublisherCopenhagen Business School [wp]
Number of pages39
Publication statusPublished - 2021
SeriesWorking Paper / Department of Economics. Copenhagen Business School


  • Voluntary unemployment insurance
  • Unemployment
  • Search
  • Education
  • Welfare
  • Inequality

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