Unemployment insurance boosts wages, reduces unemployment, and increases economic output.
The study shows that giving unemployment insurance can help boost the economy by encouraging workers to seek higher-paying jobs, even if they come with more risk. This is especially important for workers who are cautious about taking risks. Without any insurance, the economy can still run smoothly if workers are not afraid of risks. But for workers who are risk-averse, having some unemployment insurance can actually help the economy grow.