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Unemployment insurance and unemployment assistance : a comparison

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  • Vroman, Wayne
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    Abstract

    This report examines the two most common programs that provide cash compensation to unemployed workers: unemployment insurance (UI) and unemployment assistance (UA). It compares them in two areas: costs and labor market disincentives. The cost analysis first derives a framework for examining costs, and then applies the framework to both UI and UA programs. Costs are estimated for several countries, but particular attention is given to Australia, Canada and the United States. A major finding is that UA is not necessarily less costly than UI even though UA conditions eligibility on household income and assets. One must examine the specifics of a country's situation to make a cost comparison. The analysis of labor market disincentive effects reviews much of the relevant literature. It notes that the disincentive effects are present for both UI and UA but that the disincentives are different for the two types of unemployment protection programs.

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    Bibliographic Info

    Paper provided by The World Bank in its series Social Protection Discussion Papers with number 24084.

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    Date of creation: 30 Apr 2002
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    Handle: RePEc:wbk:hdnspu:24084

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    Related research

    Keywords: Economic Theory&Research; Youth and Governance; Environmental Economics&Policies; Social Protections&Assistance; Labor Markets;

    References

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    1. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
    2. Ham, John C & Svejnar, Jan & Terrell, Katherine, 1998. "Unemployment and the Social Safety Net during Transitions to a Market Economy: Evidence from the Czech and Slovak Republics," American Economic Review, American Economic Association, vol. 88(5), pages 1117-42, December.
    3. Vodopivec, Milan & Worgotter, Andreas & Raju, Dhushyanth, 2003. "Unemployment benefit systems in Central and Eastern Europe : a review of the 1990s," Social Protection Discussion Papers 26307, The World Bank.
    4. Lawrence F. Katz & Bruce D. Meyer, 1988. "The Impact of the Potential Duration of Unemployment Benefits on the Duration of Unemployment," NBER Working Papers 2741, National Bureau of Economic Research, Inc.
    5. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March.
    6. Timothy C. Sargent, . "The BU Ratio: Prospect and Retrospect," Working Papers-Department of Finance Canada 1998-09, Department of Finance Canada.
    7. Giannelli, Gianna & Micklewright, John, 1995. "Why Do Women Married to Unemployed Men Have Low Participation Rates?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(4), pages 471-86, November.
    8. Stephen A. Woodbury, 2009. "Unemployment," Book chapters authored by Upjohn Institute researchers, in: Kenneth G. Dau-Schmidt & Seth D. Harris & Orley Lobel (ed.), Labor and Employment Law and Economics, volume 2, pages 480-516 W.E. Upjohn Institute for Employment Research.
    9. Lin, Zhengxi, 1998. "Employment Insurance in Canada: Recent Trends and Policy Changes," Analytical Studies Branch Research Paper Series 1998125e, Statistics Canada, Analytical Studies Branch.
    10. Garry F. Barrett & Michael I. Cragg, 1998. "An Untold Story: The Characteristics of Welfare Use in British Columbia," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 165-188, February.
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    Cited by:
    1. Milan Vodopevic, 2004. "Comparing Unemployment Insurance and Unemployment Assistance," World Bank Other Operational Studies 11811, The World Bank.
    2. World Bank, 2007. "Armenia - Labor Market Dynamics : Volume 2. Main Report," World Bank Other Operational Studies 7846, The World Bank.

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