Alexandre Desbuquois

Alexandre Desbuquois

PhD Candidate in Economics

Department of Economics

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English, French
Key Expertise
Public Economics, Labour Economics, Behavioural Economics

About me

Research interests
Public Economics (primary)
Labour Economics, Behavioural Economics (secondary)

Job market paper
Optimal Unemployment Insurance With Liquidity Provision

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Many countries simultaneously provide Unemployment Insurance (UI) and a Severance Package (SP) upon redundancy. This paper is the first to leverage this feature and analyse the interactions between this liquidity provision at the onset of unemployment and the optimal unemployment benefits (UB) profile. Using French administrative data and a combination of regression discontinuity and kink designs, I show that the optimal UI should provide liquidity only at first, and then unemployment benefits to insure individuals in case of long-term unemployment, thus leading to an increasing benefits profile through the presence of a waiting period. This conclusion results from a combination of findings. First, UB paid early in the unemployment spell have a significantly larger moral hazard cost compared to the SP, while these two instruments have similar consumption smoothing values. Secondly, providing less UB early in the spell affects the dynamic selection into long-term unemployment. It screens out the high-types, therefore raising the value of benefits paid later through a better targeting. This reinforces the incentive to implement an increasing benefits profile. Finally, I show that the planner should push the steepness of the optimal UB profile all the way to a corner solution. The optimal design of UI is made of a SP at the onset of unemployment and of UB only in case of long-term unemployment. This paper thus provides the first economic rationalisation for the use of waiting periods.

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Professor Camille Landais
Professor Johannes Spinnewijn
Dr Xavier Jaravel

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Office Address
Department of Economics,
London School of Economics and Political Science,
Houghton Street, London WC2A 2AE