ECON130, Summer Session I – Esra Kose


Thisis Your Report #:

Quantifyingthe Benefits of Social Insurance:Unemployment Insurance andHealth



ResearchReport on Unemployment Insurance

Whatis the research question or goal of the study?

Thegoal of the study is to quantify the benefits of the social insuranceby exploring the benefits of unemployment insurance on health. Morespecifically, the goal of the research is to study whetherunemployment insurance mitigates the health impact of job loss (Kuka,2015). The goal of the research is based on the question of whetherunemployment insurance has quantifiable benefits that relate to theeconomy. In addition, the research seeks to understand the keybenefits as a way of determining the optimal levels of theunemployment insurance.

Whatdoes theory predict?

Theresearch adopts the optimal theory of optimal unemployment insurance.The theorypredicts that unemployment insurance benefits should be set at alevel where the benefits are equal to the costs of the program. Thismeans that the benefits that come in the form of reduced incomefluctuation benefits should be equal with the moral hazards of theprogram. In the research, Kuka (2015) through the theory predictsthat increased generosity in terms of unemployment insurance tends toincrease the coverage of health insurance.

Whatdo previous studies on the topic find? Are there issues with thesestudies?

Previousstudies on the effects of unemployment insurance focus on the measureof the effects of unemployment insurance on consumption smoothing.However, the main issue is that previous studies are not conclusiveon the effects of unemployment insurance. As described by Kuka(2015), research by Gruber,Kroft and Notowidigdo, East and Kuka (2015), and Browning andCrossley are limited in terms of exploring the benefits ofunemployment insurance.However, Kuka (2015) acknowledges that a research by Hsu,Matsa and Melzer explores the impact of unemployment insurance onconsumer credit markets.While these studies do not give a quantifiable effect of unemploymentinsurance, they give insight on the impact of the benefits on theunemployed people.

Whatis the empirical strategy of this paper? How does it address theissues above?

Thestrategy of the paper is an empirical strategy of the 1993–2012the Survey of Income and Program Participation (SIPP) and 1993–2012Behavioral Risk Factor Surveillance System (BRFSS).The research uses empirical strategy to study if unemploymentinsurance has mitigation of the negative effects of job loss onhealth. The empirical strategy is based on the exploitation ofvariations in the amount of unemployment benefits that result fromexogenous changes in the state laws that guide unemployment laws.

Whatdo the authors find?

Inthe research, Kuka (2015) finds out that increased unemploymentinsurance benefits will increase the coverage of health insurance.The author finds out that higher levels of unemployment insurancewill improve self-reported health and increase health utilization. Atthe same time, Kuka (2015) finds out that the effects of unemploymentinsurance are stronger in the times of higher levels of unemployment.In the research, Kuka (2015) also finds out that there are no strongeffects of unemployment insurance on risky behaviors or healthconditions.

Canyou think of any issues (problems) with this study?

Thereare no significant problems with the study. However, the authorreports a limitation of the literature review on the impact ofunemployment insurance on the health effects of job loss. Accordingto Kuka (2015) there is the issue of limitation of the literaturereview by the fact that less of the impact of unemployment insuranceon health is found by the author. The issue of the limitations ofliterature research on the unemployment insurance topic limits theunderstanding of the background of the research. May be, this isbecause the author does not explore more research to review theinformation that is presented by other authors.


Kuka,E. (2015). Quantifyingthe Benefits of Social Insurance:Unemployment Insurance andHealth. JobMarket Paper,Universityof California, Davis, January 18, 2015