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From Unemployment Benefits to Unemployment Accounts

Author

Listed:
  • Orszag, Mike

    (Towers Watson)

  • Snower, Dennis J.

    (Hertie School of Governance)

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.

Suggested Citation

  • Orszag, Mike & Snower, Dennis J., 2002. "From Unemployment Benefits to Unemployment Accounts," IZA Discussion Papers 532, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp532
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    File URL: https://docs.iza.org/dp532.pdf
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    Citations

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    Cited by:

    1. 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.
    2. Sesselmeier, Werner & Somaggio, Gabriele & Yollu, Aysel, 2006. "Mögliche Implikationen der gegenwärtigen Arbeitsmarktreformen für die zukünftige Entwicklung der Arbeitslosenversicherung," Arbeitspapiere 126, Hans-Böckler-Stiftung, Düsseldorf.
    3. Robalino, David & Vodopivec, Milan & Bodor, Andras, 2009. "Savings for unemployment in good or bad times : options for developing countries," Social Protection Discussion Papers and Notes 50320, The World Bank.
    4. Nagler, Paula, 2015. "The impact of unemployment insurance savings accounts on subsequent employment quality," MERIT Working Papers 2015-026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Hartley, Gonzalo Reyes & van Ours, Jan C. & Vodopivec, Milan, 2011. "Incentive effects of unemployment insurance savings accounts: Evidence from Chile," Labour Economics, Elsevier, vol. 18(6), pages 798-809.
    6. Milan Vodopivec, 2013. "Introducing unemployment insurance to developing countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    7. Breyer, Friedrich & Franz, Wolfgang & Homburg, Stefan & Schnabel, Reinhold & Wille, Eberhard, 2004. "Reform der sozialen Sicherung: Kurzfassung," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 92399.
    8. 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.
    9. Snower, Dennis & Orszag, Mike & Fölster, Stefan & Gidehag, Robert, 2002. "Assessing Welfare Accounts," CEPR Discussion Papers 3479, C.E.P.R. Discussion Papers.
    10. von Berchem, Sascha & Berthold, Norbert, 2004. "Reform der Arbeitslosenversicherung: Markt, Staat oder beides?," Discussion Paper Series 70, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    11. 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.
    12. Rubén Castro & Michael Weber & Gonzalo Reyes, 2018. "A policy for the size of individual unemployment accounts," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-11, December.
    13. 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].
    14. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-Related Unemployment Benefits in a Unionised Economy," IZA Discussion Papers 701, Institute of Labor Economics (IZA).
    15. Goerke, Laszlo, 2007. "Unemployment Insurance Savings Accounts and Collective Wage Determination," IZA Discussion Papers 3141, Institute of Labor Economics (IZA).
    16. 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.
    17. Markus Knell, 2005. "Demographic Fluctuations, Sustainability Factors and Intergenerational Fairness – An Assessment of Austria's New Pension System," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 23-42.
    18. Bovenberg, A.L. & Hansen, M. & Sorensen, P.B., 2008. "Individual savings accounts for social insurance : Rationale and alternative designs," Other publications TiSEM 72e236b0-ad63-4bea-a314-6, Tilburg University, School of Economics and Management.

    More about this item

    Keywords

    unemployment benefits; unemployment accounts; redistribution; employment; unemployment; pensions;
    All these keywords.

    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; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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