Measuring Unemployment Insurance Generosity
AbstractIn this paper, we develop a methodology to summarize the various policy parameters of an unemployment insurance scheme into a single generosity parameter. Unemployment insurance policies are multdimensional objects. They are typically defined by waiting periods, eligibility duration, benefit levels and asset tests when eligible, which makes 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. 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 University of Connecticut, Department of Economics in its series Working papers with number 2008-42.
Length: 23 pages
Date of creation: Nov 2008
Date of revision:
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unemployment insurance; labor market policy; measurement;
Other versions of this item:
- Stéphane Pallage & Lyle Scruggs & Christian Zimmermann, 2009. "Measuring Unemployment Insurance Generosity," Cahiers de recherche 0921, CIRPEE.
- 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.
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-12-07 (All new papers)
- NEP-DGE-2008-12-07 (Dynamic General Equilibrium)
- NEP-IAS-2008-12-07 (Insurance Economics)
- NEP-LAB-2008-12-07 (Labour Economics)
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.:
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