The Agenda

The Strong Case for Lump-Sum Unemployment Benefits

One reason lump-sum unemployment benefits are attractive is that they don’t punish workers for finding new jobs relatively quickly. Yet lump-sum payments also give workers the freedom to take a longer amount of time to find more remunerative or engaging work. Among other things, a lump-sum payment could facilitate relocation to a more promising labor market, or it could be used to make an investment in training, etc. (See Raj Chetty’s “Moral Hazard vs. Liquidity and Optimal Unemployment Insurance.”)

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