The IEB research program in Tax Systems' Analysis aims at promoting high quality research in the field of taxation, taking into account not only the traditional approach to optimal taxation, but also administrative issues and the decentralization or globalization context. The ultimate aim of the program is to generate socially useful knowledge in this field. Special emphasis is put on empirical research, and on the analysis of the Spanish Tax System. The program enjoys the support from the IEB-Foundation.The Barcelona Institute of Economics (IEB) is a research centre at the University of Barcelona (UB) which specializes in the field of applied economics. The IEB is a foundation funded by the following institutions: Applus, Abertis, Ajuntament de Barcelona, Diputació de Barcelona, Gas Natural and La Caixa. The IEB working papers represent ongoing research that is circulated to encourage discussion and has not undergone a peer review process. Any opinions expressed here are those of the author(s) and not those of IEB. motivates net contributors to support redistributive policies. Using instrumental variable estimation and exploiting a particularity of the Spanish labour market we estimate how workers' declared preferences for unemployment benefits spending respond to changes in the local unemployment rate. We then decompose this response into the part explained by risk aversion, and thus demand for insurance, and the part explained by the public goods nature of redistribution. Our results suggest that the declared preferences of workers for unemployment benefits spending are driven by demand for insurance rather than any public goods component. We show how these results suggest that preferences for redistribution in the form of unemployment benefits are driven by insurance considerations rather than by any public goods consideration.
Documents deMAIN RESULT: Workers' demand for unemployment benefits (UB) responds positively to changes in the local unemployment rate. However, the origin of this demand is not due to workers' concern for the unemployed, but to a demand for insurance, as the relationship between the unemployment rate and demand for UB is present only for those workers who face a risk of becoming unemployed. The estimation of this self-insurance motivation is reinforced by the fact that only cyclical unemployment is relevant to cause the demand of UB.JEL Codes: D64, H53, H77