Sneessens, H.R. (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES); FacultŽ Libre de Sciences Economiques, Lille) Van der Linden, B. (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) ; Belgian National Fund for Scientific Research (FNRS))
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In many countries (especially in Belgium) persistent unemployment and budget deficit have motivated a reconsideration of the advantages of existing unemployment insurance schemes. Many aspects have to be taken into account. An efficient allocation of unemployment and wage risks is made difficult by factors such as asymmetric information, undiversifiable macroeconomic risks, labour market segmentation, firms or undiversifiable macroeconomic risks, labour market segmentation, firms or unions market power, tax distortions, etc. This paper surveys the available literature on these issues, so as to offer guidelines for this debate. If anything, existing results show that simplistic views are to be avoided. A correct appraisal of the merits of a given unemployment insurance scheme necessitates a global approach that takes into account not only the level of unemployment benefits and the conditions under which they are paid, but also the way social security is financed and the labour market functions.
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