How to Save Unemployment Insurance
50 Ariz. St. L.J. 1009 (2018). Brian Galle. Unemployment insurance is almost universally recognized as one of a government’s best tools for fighting recessions, as well as an important source of relief for working-class families suffering temporary hardship. Unfortunately, as commentators and Congress have recognized, the U.S. system of financing its unemployment insurance program is seriously dysfunctional. Reform proposals, however, do not fully diagnose the causes of current failures. In particular, other commentators neglect the role of fiscal myopia in state officials’ failures to save for future UI needs. For instance, reformers mostly propose offering rewards or penalties that will take effect far in the future. These incentives have only small effects on myopic officials. Building on work in behavioral economics by myself and others, I propose a set of…