From Unemployment Benefits to Unemployment Accounts

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From Unemployment Benefits to Unemployment Accounts

Author Info

Orszag, J. Michael (Watson Wyatt and IZA Bonn)
Snower, Dennis () (Birkbeck College, University of London, CEPR and IZA Bonn)

Additional information is available for the following registered author(s):

Dennis Snower

Abstract

We explore the implications of replacing current unemployment benefit (UB) systems by unemployment accounts (UA). Under the UA system, employed people would be required to make ongoing contributions to their unemployment accounts, and the balances in these accounts would then be available to them during periods of unemployment. The government would be able to undertake balanced-budget redistributions among the UAs, taxing the contributions of the rich and subsidizing those of the poor. When people retire, they could use their remaining UA balances to top up their pensions. Under the unemployment benefit system, people are in effect rewarded for being unemployed (through the unemployment benefits) and penalized for being employed (through the taxes that finance the unemployment benefits). The UA system alleviates these externality problems. For when an unemployed person makes withdrawals from his UA, he is thereby diminishing the amount of funds that are available to him later on.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 532.

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Length: 23 pages
Date of creation: Jul 2002
Date of revision:
Handle: RePEc:iza:izadps:dp532

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Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
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-2002-07-31 (All new papers)
NEP-LAB-2002-07-31 (Labour Economics)
NEP-LTV-2002-07-04 (Unemployment, Inequality & Poverty)
NEP-MAC-2002-07-31 (Macroeconomics)

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.)

Rürup, Bert, 2005. "Arbeitslosenversicherung: Staatlich, privat oder gemischt? (Unemployment insurance * state-run, private or a combination of both?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 373-382. [Downloadable!]
Lutz, Roman, 2006. "Was spricht eigentlich gegen eine private Arbeitslosenversicherung?," IAB Discussion Paper 200624, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-Related Unemployment Benefits in a Unionised Economy," IZA Discussion Papers 701, Institute for the Study of Labor (IZA). [Downloadable!]
Laszlo Goerke, 2007. "Unemployment Insurance Savings Accounts and Collective Wage Determination," IZA Discussion Papers 3141, Institute for the Study of Labor (IZA). [Downloadable!]
Markus Knell, 2005. "Demographic Fluctuations, Sustainability Factors and Intergenerational Fairness — An Assessment of Austrias New Pension System," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 23-42, April. [Downloadable!]
Fölster, Stefan & Gidehag, Robert & Orszag, Mike & Snower, Dennis J., 2002. "Assessing Welfare Accounts," CEPR Discussion Papers 3479, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- Fölster, Stefan & Gidehag, Robert & Orszag, Mike & Snower, Dennis, 2002. "Assessing Welfare Accounts," IZA Discussion Papers 533, Institute for the Study of Labor (IZA). [Downloadable!]
Peter Birch Sørensen & Martin Ino Hansen & A. Lans Bovenberg, 2006. "Savings Accounts and the Life-Cycle Approach to Social Insurance," EPRU Working Paper Series 06-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics. [Downloadable!]

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