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Voluntary Public Unemployment Insurance

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Author Info

  • Donald O. Parsons

    (George Washington University, Washington D.C.)

  • Torben Tranæs

    (Danish National Institute of Social Research)

  • Helene Bie Lilleør

    (Economic Policy Research Unit, University of Copenhagen)

Abstract

Voluntary public unemployment systems are limited to a handful of countries, including Finland, Sweden, and, more substantially, Denmark. A voluntary system has the positive feature of other user-cost schemes, potentially efficient targeting of services. This presumes rational behavior as well as reasonable risk rating of premiums and the absence of worker access to alternative social programs. Using a 10% sample of the Danish population drawn from administrative data, we exploit the voluntary Danish system to explore the structure of unemployment insurance demand. The insurance take-up rate is surprisingly high, 80 percent in 1995, but varies systematically with economic incentives in a way that raises doubts about the targeting value of the current system. Political support for the Danish system may derive instead from the fact that a universal, compulsory system would generate rather modest additional net funds and with a twist--additional revenue would come disproportionately from low-wage workers.

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Bibliographic Info

Paper provided by Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics in its series EPRU Working Paper Series with number 03-05.

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Length: 29 pages; tables
Date of creation: Dec 1999
Date of revision: Jun 2003
Handle: RePEc:kud:epruwp:03-05

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References

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  1. Björklund, Anders, 1984. "Unemployment and Mental Health: Some Evidence from Panel Data," Working Paper Series 120, Research Institute of Industrial Economics.
  2. Gwilym Pryce & Margaret Keoghan, 2001. "Unemployment insurance for mortgage borrowers: is it viable and does it cover those most in need?," International Journal of Housing Policy, Taylor & Francis Journals, vol. 2(1), pages 87-114.
  3. Rebecca M. Blank & David Card, 1989. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," NBER Working Papers 2871, National Bureau of Economic Research, Inc.
  4. Hausman, Jerry A, 1978. "Specification Tests in Econometrics," Econometrica, Econometric Society, vol. 46(6), pages 1251-71, November.
  5. Katherine Baicker & Claudia Goldin & Lawrence F. Katz, 1998. "A Distinctive System: Origins and Impact of U.S. Unemployment Compensation," NBER Chapters, in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 227-264 National Bureau of Economic Research, Inc.
  6. Neumann, George & Pedersen, Peder J. & Westergard-Nielsen, Niels, 1991. "Long-run international trends in aggregate unionization," European Journal of Political Economy, Elsevier, vol. 7(3), pages 249-274, October.
  7. Anderson, Patricia M & Meyer, Bruce D, 1997. "Unemployment Insurance Takeup Rates and the After-Tax Value of Benefits," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 913-37, August.
  8. Björklund, Anders & Holmlund, Bertil, 1986. "The Economics of Unemployment Insurance: The Case of Sweden," Working Paper Series 167, Research Institute of Industrial Economics.
  9. Paul Storer & Marc A. Van Audenrode, 1995. "Unemployment Insurance Take-Up Rates in Canada: Facts, Determinants, and Implications," Canadian Journal of Economics, Canadian Economics Association, vol. 28(4a), pages 822-35, November.
  10. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
  11. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  12. Michael D. Bordo & Claudia Goldin & Eugene N. White, 1998. "The Defining Moment: The Great Depression and the American Economy in the Twentieth Century," NBER Books, National Bureau of Economic Research, Inc, number bord98-1, October.
  13. McCall, Brian P, 1995. "The Impact of Unemployment Insurance Benefit Levels on Recipiency," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 189-98, April.
  14. Browne, Mark J & Hoyt, Robert E, 2000. " The Demand for Flood Insurance: Empirical Evidence," Journal of Risk and Uncertainty, Springer, vol. 20(3), pages 291-306, May.
  15. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
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Citations

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Cited by:
  1. Bartha, Zoltán & Sáfrányné Gubik, Andrea & Tóthné Szita, Klára, 2013. "Intézményi megoldások, fejlődési modellek
    [Institutional solutions, development models]
    ," MPRA Paper 50901, University Library of Munich, Germany.
  2. Anne Møller Danø & Mette Ejrnæs & Leif Husted, 2004. "Do Single Women Value Early Retirement more than Single Men?," CAM Working Papers 2004-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  3. Bogedan, Claudia, 2006. "Readjusting the social democratic welfare state in Denmark 1973 - 2003," TranState Working Papers 40, University of Bremen, Collaborative Research Center 597: Transformations of the State.
  4. Torben Andersen, 2003. "From Excess to Shortage - Recent Developments in the Danish Labour Market," CESifo Working Paper Series 933, CESifo Group Munich.
  5. Salazar, C, 2007. "Determinantes de la Adopción Voluntaria del Seguro de Cesantía
    [Determinants of Voluntary Adoptions of Unemployment Insurance]
    ," MPRA Paper 7693, University Library of Munich, Germany.
  6. Leschke, Janine, 2007. "Gender differences in unemployment insurance coverage: a comparative analysis," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2007-106, Social Science Research Center Berlin (WZB).
  7. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity: Labour Market Performance in Denmark," CESifo Economic Studies, CESifo, vol. 53(3), pages 389-429, September.
  8. Mette Ejrnaes & Stefan Hochguertel, 2008. "Entrepreneurial Moral Hazard in Income Insurance," Tinbergen Institute Discussion Papers 08-065/3, Tinbergen Institute, revised 12 Aug 2011.
  9. Jespersen, Svend T. & Munch, Jakob R. & Skipper, Lars, 2008. "Costs and benefits of Danish active labour market programmes," Labour Economics, Elsevier, vol. 15(5), pages 859-884, October.

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