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From Unemployment Benefits to Unemployment Accounts

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Author Info

  • Orszag, Mike

    ()
    (Towers Watson)

  • Snower, Dennis J.

    ()
    (Kiel Institute for the World Economy)

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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Bibliographic Info

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

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Length: 24 pages
Date of creation: Jul 2002
Date of revision:
Handle: RePEc:iza:izadps:dp532

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Related research

Keywords: unemployment benefits; unemployment accounts; redistribution; employment; unemployment; pensions;

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Cited by:
  1. Fölster, Stefan & Gidehag, Robert & Orszag, Mike & Snower, Dennis J., 2002. "Assessing Welfare Accounts," IZA Discussion Papers 533, Institute for the Study of Labor (IZA).
  2. Vodopivec, Milan, 2009. "Introducing Unemployment Insurance to Developing Countries," IZA Policy Papers 6, Institute for the Study of Labor (IZA).
  3. Markus Knell, 2005. "Demographic Fluctuations, Sustainability Factors and Integenerational Fairness – An Assessment of Austria's New Pension System," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 23–42.
  4. Goerke, Laszlo, 2007. "Unemployment Insurance Savings Accounts and Collective Wage Determination," IZA Discussion Papers 3141, Institute for the Study of Labor (IZA).
  5. Reyes, Gonzalo & van Ours, Jan C. & Vodopivec, Milan, 2010. "Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile," CEPR Discussion Papers 7632, C.E.P.R. Discussion Papers.
  6. repec:iab:iabzaf:v:38:i:2/3:p:373-382 is not listed on IDEAS
  7. Breyer, Friedrich & Franz, Wolfgang & Homburg, Stefan & Schnabel, Reinhold & Wille, Eberhard, 2004. "Reform der sozialen Sicherung," EconStor Books, ZBW - German National Library of Economics, number 92399, March.
  8. 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.
  9. von Berchem, Sascha & Berthold, Norbert, 2004. "Reform der Arbeitslosenversicherung : Markt, Staat oder beides?," Wirtschaftswissenschaftliche Beiträge 70, Julius-Maximilians-Universität Würzburg, Lehrstuhl für Volkswirtschaftslehre, insbes. Wirtschaftsordnung und Sozialpolitik.
  10. 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].
  11. 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).

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