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Unemployment and workers' compensation programmes: rationale, design, labour supply and income support

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  • Bruce Meyer

Abstract

I examine the unemployment insurance (UI) and workers’ compensation (WC) insurance programmes, concentrating on labour supply, insurance and income redistribution. UI and WC increase the time employees spend out of work. Elasticities of lost work time that incorporate both the incidence and duration of claims are centred at 1.0 for UI and between 0.5 and 1.0 for WC. These elasticities are larger than elasticities typically found in studies of wage effects on hours worked by men, probably because UI and WC lead to short-run variation in wages with mostly a substitution effect and the programmes alter the participation margin. Some good evidence suggests that UI smooths the consumption of the unemployed and more clearly indicates that UI progressively redistributes resources. There is substantial evidence that injured workers suffer material hardships even with WC programmes, but research has not provided an overall picture of the insurance and redistributive aspects of WC.

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Bibliographic Info

Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 23 (2002)
Issue (Month): 1 (March)
Pages: 1-49

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Handle: RePEc:ifs:fistud:v:23:y:2002:i:1:p:1-49

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Cited by:
  1. Pierre Koning, 2005. "Estimating the Impact of Experience Rating on the Inflow into Disability Insurance in the Netherlands," Working Papers 05-07, Utrecht School of Economics.
  2. Gabriele Cardullo & Bruno Van der Linden, 2007. "Employment Subsidies and Substitutable Skills: An Equilibrium Matching Approach," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(4), pages 375-404.
  3. Bruno Van Der Linden, 2003. "Unemployment Insurance and Training in an Equilibrium Matching Model with Heterogeneous Agents," Working Papers 2003-01, Centre de Recherche en Economie et Statistique.
  4. Hamish Low & Costas Meghir & Luigi Pistaferri, 2008. "Wage risk and employment risk over the life cycle," IFS Working Papers W08/06, Institute for Fiscal Studies.
  5. Bruno, VAN DER LINDEN, 2005. "Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness," Discussion Papers (ECON - Département des Sciences Economiques) 2005007, Université catholique de Louvain, Département des Sciences Economiques.
  6. Iturriza, Ana & Bedi, Arjun S. & Sparrow, Robert, 2008. "Unemployment Assistance and Transition to Employment in Argentina," IZA Discussion Papers 3579, Institute for the Study of Labor (IZA).
  7. Kelly D. Edmiston, 2006. "Workers' Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145.
  8. Nordberg, Morten, 2007. "The Total Tax on Labour Income," Memorandum 05/2007, Oslo University, Department of Economics.
  9. Bronchetti, Erin Todd, 2012. "Workers' compensation and consumption smoothing," Journal of Public Economics, Elsevier, vol. 96(5), pages 495-508.

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