Unemployment Accounts and Employment Incentives

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Unemployment Accounts and Employment Incentives

Author Info

Alessio J. G. Brown () (Kiel Institute for World Economics and University of Kiel)
J. Michael Orszag () (Watson Wyatt Worldwide and IZA Bonn)
Dennis J. Snower () (Kiel Institute for World Economics, University of Kiel, CEPR and IZA Bonn)

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Abstract

We explore the far-reaching implications of replacing current unemployment benefit (UB) systems by an unemployment accounts (UA) system. Under the UA system, employed people are required to make ongoing contributions to their UAs and the balances in these accounts are available to them during periods of unemployment. The government is able to undertake balanced-budget interpersonal redistributions among the UAs. At the end of their working lives, people could transfer the remaining balances on their UAs into their pensions. We present an analytical framework to analyse the incentive effects of UAs and calibrate our model for the high unemployment countries of Europe. Our results suggest that this policy reform would significantly change people’s employment incentives and could achieve reductions in unemployment without reducing the level of support to the unemployed.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2105.

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Length: 25 pages
Date of creation: Apr 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2105

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Article
- Brown, Alessio J.G. & Orszag, J. Michael & Snower, Dennis J., 2008. "Unemployment accounts and employment incentives," European Journal of Political Economy, Elsevier, vol. 24(3), pages 587-604, September. [Downloadable!] (restricted)
Paper
- Alessio J. G. Brown & J. Michael Orszag & Dennis J. Snower, 2006. "Unemployment Accounts and Employment Incentives," Kiel Working Papers 1274, Kiel Institute for the World Economy. [Downloadable!]
- Brown, Alessio J G & Orszag, Mike & Snower, Dennis J., 2006. "Unemployment Accounts and Employment Incentives," CEPR Discussion Papers 5692, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

Find related papers by JEL classification:
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-05-13 (All new papers)
NEP-DGE-2006-05-13 (Dynamic General Equilibrium)
NEP-LAB-2006-05-13 (Labour Economics)
NEP-LTV-2006-05-13 (Unemployment, Inequality & Poverty)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

J. Michael Orszag & Dennis J. Shower, 2000. "The Effectiveness of Employment Vouchers: A Simple Approach," German Economic Review, Blackwell Publishing, vol. 1(4), pages 385-419, November. [Downloadable!] (restricted)

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Alessio J. G. Brown & Dennis Snower, 2009. "Incentives and Complementarities of Flexicurity," Kiel Working Papers 1526, Kiel Institute for the World Economy. [Downloadable!]

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