Measuring Unemployment Insurance Generosity
AbstractUnemployment insurance policies are multidimensional objects. They are typically defined by waiting periods, eligibility duration, benefit levels and asset tests when eligible, which make intertemporal or international comparisons difficult. To make things worse, labor market conditions, such as the likelihood and duration of unemployment matter when assessing the generosity of different policies. In this paper, we develop a methodology to measure the generosity of unemployment insurance programs with a single metric. We build a first model with such complex characteristics. Our model features heterogeneous agents that are liquidity constrained but can self-insure. We then build a second model that is similar, except that the unemployment insurance is simpler: it is deprived of waiting periods and agents are eligible forever with constant benefits. We then determine which level of benefits in this second model makes agents indifferent between both unemployment insurance policies. We apply this strategy to the unemployment insurance program of the United Kingdom and study how its generosity evolved over time.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 0921.
Date of creation: 2009
Date of revision:
Social policy; generosity; unemployment insurance; measurement;
Other versions of this item:
- Pallage, Stéphane & Scruggs, Lyle & Zimmermann, Christian, 2008. "Measuring Unemployment Insurance Generosity," IZA Discussion Papers 3868, Institute for the Study of Labor (IZA).
- Lyle Scruggs & Christian Zimmermann & Stephane Pallage, 2008. "Measuring Unemployment Insurance Generosity," 2008 Meeting Papers 662, Society for Economic Dynamics.
- Stephane Pallage & Lyle Scruggs & Christian Zimmermann, 2008. "Measuring Unemployment Insurance Generosity," Working papers 2008-42, University of Connecticut, Department of Economics.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-03 (All new papers)
- NEP-DGE-2009-07-03 (Dynamic General Equilibrium)
- NEP-IAS-2009-07-03 (Insurance Economics)
- NEP-LAB-2009-07-03 (Labour Economics)
- NEP-MAC-2009-07-03 (Macroeconomics)
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