The heterogeneous effects of social assistance and unemployment insurance: evidence from a life-cycle model of family labor supply and savings

We empirically analyze the heterogeneous welfare effects of unemployment insurance
and social assistance. We estimate a structural life-cycle model of singles' and married
couples' labor supply and savings decisions. The model includes heterogeneity by age,
education, wealth, sex and household composition. In aggregate, social assistance dominates
unemployment insurance; however, the opposite holds true for married men, whose
leisure time declines more than that of their spouses when unemployment insurance is
reduced. A revenue-neutral rebalancing of social support away from unemployment insurance
and toward social assistance increases aggregate welfare. Income pooling in married
households decreases the welfare value of social assistance.