On Voters\u27 Attitudes Towards Unemployment Insurance Subsidies across Regions: A Canadian Simulation

The Canadian unemployment insurance program is designed to reflect the varying risk of joblessness across regions. Regions that are considered low-risk areas subsidize higher risk ones. A region\u27s risk is typically proxied by its relative unemployment rate. We use a dynamic, heterogeneous-agent model calibrated to Canada to analyze voters preferences between a uniformly generous unemployment insurance and the current system with asymmetric generosity. We find that Canada\u27s unusual unemployment insurance system is surprisingly close to what voters would choose in spite of the possibilities of moral hazard and self-insurance through asset build-up