The Research On Optimal Unemployment Insurance Benefit Paying System Choosing And Level Designing

Unemployment insurance (UI) is the important part of social security system. UI has a disincentive effect on the job search behavior and benefit choice of the unemployed when insuring them, which affects the level of re-employment obviously. All of these can increase the cost of government UI. Therefore, an efficient UI programme means the trade-off between security and efficiency in order to boost the unemployed men to search while protecting them. So, UI design has an important impact on incentives for employment, we need to design the benefit of UI properly to increase re-employment greatly, and then improve the welfare of unemployment, economize the UI cost. In the past three decades, the optimal design of unemployment insurance was always an important research topic n west.The paper introduces its meaning, technical routine and research methods in the beginning. Then follows the full contents. Firstly, the background and basic framework are introduced, and then it is a all-sided literature review including equilibrium modal, precautionary saving modal and moral hazard modal. This paper analyzes four types of policies optimizing unemployment insurance in these theory modals. The second part has a theoretical analysis on UI optimizing. On the basis of the simple modal in Shavell and Weiss(1979), we build a new modal introducing a new policy parameter named re-employment bonus. The aim function of the modal is to maximum the welfare of unemployment under the restriction of UI cost. We also advance the theory hypothesis of optimal UI in China according to the characteristic of Chinese labor market and UI system. The third part are empirical analysis, we mainly analyze the optimizing approach of UI benefit schedule. We simulate three unemployment insurance benefit paying systems using modal according to the Qing Dao unemployment register data: fixed paying, declining paying, increasing first-then decreasing paying with re-employment bonus. By comparative analyzing of three systems, we get that the increasing first-then decreasing paying with re-employment bonus is best of three. Because this system can economize government cost, increase the re-employment and improve the welfare of the unemployment most of three. The results validate the theory hypothesis almost. Finally, it is the conclusion, future research proposal and some policy suggestions.The contribution and innovation of this paper include: Firstly, this paper is earlier to analyze the optimal UI designing based on re-employment improvement in China. Secondly, the paper has a complete empirical analysis using the improved UI optimizing modal which introduces a new policy parameter. Thirdly, the whole research has offered a reference for the system and policy in UI designing of China.