Optimal Wage Insurance

Long-term workers who lose their jobs due to mass layoffs experience substantial wage loss and persistently lower post-layoff wages when compared to workers who lost their job for other reasons. Unemployment insurance (UI), the primary public form of insurance for earning losses, is designed to alleviate income instability for temporary layoffs, not long-term income instability. Doctoral student in economics Theodore Naff proposes introducing optimal wage insurance (WI) to address persistent, long-term income instability due to mass layoffs. He will create a model for WI based on Re-Employment Trade Adjustment Assistance, a real-world wage insurance program that offers a subsidy to workers who accept a lower paid position due to layoffs.