IDEAS home Printed from https://ideas.repec.org/p/zbw/ifwkwp/1274.html
   My bibliography  Save this paper

Unemployment accounts and employment incentives

Author

Listed:
  • Brown, Alessio J. G.
  • Orszag, Jonathan Michael
  • Snower, Dennis J.

Abstract

We explore the far-reaching implications of replacing current unemployment benefit (UB) systems by an unemployment accounts (UA) system. Under the UA system, employed people are required to make ongoing contributions to their UAs and the balances in these accounts are available to them during periods of unemployment. The government is able to undertake balanced-budget interpersonal redistributions among the UAs. At the end of their working lives, people could transfer the remaining balances on their UAs into their pensions. We present an analytical framework to analyse the incentive e.ects of UAs and calibrate our model for the high unemployment countries of Europe. Our results suggest that this policy reform would significantly change people’s employment incentives and could achieve reductions in unemployment without reducing the level of support to the unemployed.

Suggested Citation

  • Brown, Alessio J. G. & Orszag, Jonathan Michael & Snower, Dennis J., 2006. "Unemployment accounts and employment incentives," Kiel Working Papers 1274, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1274
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/3810/1/kap1274.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stiglitz, Joseph E. & Yun, Jungyoll, 2005. "Integration of unemployment insurance with retirement insurance," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2037-2067, December.
    2. Orszag, Jonathan Michael & Snower, Dennis J., 2000. "The effectiveness of employment vouchers: a simple approach," Open Access Publications from Kiel Institute for the World Economy 2519, Kiel Institute for the World Economy (IfW Kiel).
    3. Milan Vodopivec, 2006. "Choosing a System of Unemployment Income Support: Guidelines for Developing and Transition Countries," The World Bank Research Observer, World Bank, vol. 21(1), pages 49-89.
    4. A. Lans Bovenberg & Peter Birch Sørensen, 2004. "Improving the Equity-Efficiency Trade-Off: Mandatory Savings Accounts for Social Insurance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(4), pages 507-529, August.
    5. Robert Shimer & Ivan Werning, 2008. "Liquidity and Insurance for the Unemployed," American Economic Review, American Economic Association, vol. 98(5), pages 1922-1942, December.
    6. Alfred Boss & Alessio J. G. Brown & Dennis J. Snower, 2008. "Beschäftigungskonten für Deutschland," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(2), pages 139-155, May.
    7. Orszag J. Michael & Snower Dennis J., 2000. "The Effectiveness of Employment Vouchers: A Simple Approach," German Economic Review, De Gruyter, vol. 1(4), pages 385-419, December.
    8. Folster, Stefan, 1999. "Social Insurance Based on Personal Savings," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 5-18, March.
    9. Kock, Udo & Butter, A.G. den, 2001. "Can individual unemployment savings accounts resolve Okun's equity-efficiency trade-off?," Serie Research Memoranda 0026, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    10. Kugler, Adriana D., 2005. "Wage-shifting effects of severance payments savings accounts in Colombia," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 487-500, February.
    11. Vodopivec, Milan, 2008. "How Viable Are Unemployment Insurance Savings Accounts: Simulation Results for Slovenia," IZA Discussion Papers 3438, Institute of Labor Economics (IZA).
    12. Esguerra, Jude H. & Ogawa, Makoto & Vodopivec, Milan, 2002. "Options of public income support for the unemployed in the Philippines and social protection," Social Protection and Labor Policy and Technical Notes 25509, The World Bank.
    13. Miguel Jaramillo & Jaime Saavedra, 2005. "Severance Payment Programs in Latin America," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(3), pages 275-307, September.
    14. Jacqueline Mazza, 2000. "Unemployment Insurance: Case Studies and Lessons for Latin America and the Caribbean," IDB Publications (Working Papers) 6460, Inter-American Development Bank.
    15. repec:ces:ifodic:v:1:y:2003:i:3:p:14567908 is not listed on IDEAS
    16. Adriana Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 389-410, August.
    17. Martin Feldstein & Daniel Altman, 2007. "Unemployment Insurance Savings Accounts," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 35-64, National Bureau of Economic Research, Inc.
    18. Peter AUER & Janine BERG & Ibrahim COULIBALY, 2005. "Is a stable workforce good for productivity?," International Labour Review, International Labour Organization, vol. 144(3), pages 319-343, September.
    19. J. Michael Orszag & Dennis J. Shower, 2000. "The Effectiveness of Employment Vouchers: A Simple Approach," German Economic Review, Verein für Socialpolitik, vol. 1(4), pages 385-419, November.
    20. Stefan Fölster & Robert Gidehag & Mike Orszag & Dennis J. Snower, 2003. "Health Accounts and Other Welfare Accounts," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(3), pages 09-14, October.
    21. Goerke, Laszlo, 2007. "Unemployment Insurance Savings Accounts and Collective Wage Determination," IZA Discussion Papers 3141, Institute of Labor Economics (IZA).
    22. Edi Karni, 1999. "Optimal Unemployment Insurance: A Survey," Southern Economic Journal, John Wiley & Sons, vol. 66(2), pages 442-465, October.
    23. Chia, Ngee Choon & Tsui, Albert K. C., 2003. "Life annuities of compulsory savings and income adequacy of the elderly in Singapore," Journal of Pension Economics and Finance, Cambridge University Press, vol. 2(1), pages 41-65, March.
    24. Robert Holzmann, 2005. "Reforming Severance Pay: Toward an Understanding of Program Rationale, Economic Impact and Reform Options," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 32(3), pages 251-253, September.
    25. Orszag, Mike & Snower, Dennis J., 1997. "Expanding the Welfare System: A Proposal for Reform," CEPR Discussion Papers 1674, C.E.P.R. Discussion Papers.
    26. Jude H. Esguerra & Mokoto Ogawa & Milan Vodopivec, 2001. "Income Support for the Unemployed : Options for the Philippines," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 38(2), pages 37-66, December.
    27. Shiller, Robert J., 2006. "Life-cycle personal accounts proposal for Social Security: An evaluation of President Bush's proposal," Journal of Policy Modeling, Elsevier, vol. 28(4), pages 427-444, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tito Boeri & Juan F. Jimeno, 2015. "The unbearable divergence of unemployment in europe," Working Papers 1534, Banco de España.
    2. Setty, Ofer, 2011. "Unemployment Accounts," Foerder Institute for Economic Research Working Papers 275748, Tel-Aviv University > Foerder Institute for Economic Research.
    3. Brown, Alessio J. G. & Snower, Dennis J., 2009. "Incentives and complementarities of flexicurity," Kiel Working Papers 1526, Kiel Institute for the World Economy (IfW Kiel).
    4. David A. Robalino, 2014. "Designing unemployment benefits in developing countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-15, July.
    5. David Robalino & Michael Weber, 2013. "Designing and implementing unemployment benefit systems in middle and low income countries: beyond risk-pooling vs savings," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-20, December.
    6. Dennis J. Snower & Alessio J. G. Brown & Christian Merkl, 2009. "Globalization and the Welfare State: A Review of Hans-Werner Sinn's Can Germany Be Saved?," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 136-158, March.
    7. repec:hal:spmain:info:hdl:2441/2vagho9cns9668gqt9f4q5v8rg is not listed on IDEAS
    8. Martin Feldstein & Daniel Altman, 2007. "Unemployment Insurance Savings Accounts," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 35-64, National Bureau of Economic Research, Inc.
    9. Bruno Coquet, 2017. "Les allocations chômage devraient-elles être dégressives ?," SciencePo Working papers Main hal-03457573, HAL.
    10. Boeri, Tito & Jimeno, Juan F., 2016. "Learning from the Great Divergence in unemployment in Europe during the crisis," Labour Economics, Elsevier, vol. 41(C), pages 32-46.
    11. Keuschnigg, Christian & Fisher, Walter, 2011. "Life-Cycle Unemployment, Retirement and Parametric Pension Reform," Economics Working Paper Series 1119, University of St. Gallen, School of Economics and Political Science.
    12. Romain Duval & Prakash Loungani, 2021. "Designing Labor Market Institutions in Emerging Market and Developing Economies: A Review of Evidence and IMF Policy Advice," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(1), pages 31-83, March.
    13. Nagler, Paula, 2015. "The impact of unemployment insurance savings accounts on subsequent employment quality," MERIT Working Papers 2015-026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    14. Egbert Jongen, 2009. "An analysis of individual accounts for the unemployment risk in the Netherlands," CPB Document 186, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Siebert, Horst, 2006. "Old Europe's social model: A reason of low growth? The case of Germany," Kiel Working Papers 1291, Kiel Institute for the World Economy (IfW Kiel).
    16. Egbert Jongen, 2009. "An analysis of individual accounts for the unemployment risk in the Netherlands," CPB Document 186.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    17. Parsons, Donald O., 2016. "Job Displacement Insurance: A Policy Typology," IZA Discussion Papers 9865, Institute of Labor Economics (IZA).
    18. Stefan Groot & Henri de Groot, 2011. "Wage inequality in the Netherlands: Evidence, trends and explanations," CPB Discussion Paper 186.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Milan Vodopivec, 2013. "Introducing unemployment insurance to developing countries," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-23, December.
    2. Hartley, Gonzalo Reyes & van Ours, Jan C. & Vodopivec, Milan, 2011. "Incentive effects of unemployment insurance savings accounts: Evidence from Chile," Labour Economics, Elsevier, vol. 18(6), pages 798-809.
    3. A. Lans Bovenberg & Peter Birch Sørensen, "undated". "Optimal Taxation and Social Insurance in a Lifetime Perspective," EPRU Working Paper Series 06-01, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    4. Stefan Groot & Henri de Groot, 2011. "Wage inequality in the Netherlands: Evidence, trends and explanations," CPB Discussion Paper 186.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    5. Goerke, Laszlo, 2007. "Unemployment Insurance Savings Accounts and Collective Wage Determination," IZA Discussion Papers 3141, Institute of Labor Economics (IZA).
    6. Egbert Jongen, 2009. "An analysis of individual accounts for the unemployment risk in the Netherlands," CPB Document 186.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Egbert Jongen, 2009. "An analysis of individual accounts for the unemployment risk in the Netherlands," CPB Document 186, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Ruud de Mooij, 2004. "Towards efficient unemployment insurance in the Netherlands," CPB Memorandum 100, CPB Netherlands Bureau for Economic Policy Analysis.
    9. Robalino, David & Vodopivec, Milan & Bodor, Andras, 2009. "Savings for unemployment in good or bad times : options for developing countries," Social Protection Discussion Papers and Notes 50320, The World Bank.
    10. Peter Birch Sørensen & Martin Ino Hansen & A. Lans Bovenberg, 2006. "Savings Accounts and the Life-Cycle Approach to Social Insurance," EPRU Working Paper Series 06-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    11. Sesselmeier, Werner & Somaggio, Gabriele & Yollu, Aysel, 2006. "Mögliche Implikationen der gegenwärtigen Arbeitsmarktreformen für die zukünftige Entwicklung der Arbeitslosenversicherung," Arbeitspapiere 126, Hans-Böckler-Stiftung, Düsseldorf.
    12. Orszag, J. Michael & Snower, Dennis J., 2002. "Incapacity benefits and employment policy," Labour Economics, Elsevier, vol. 9(5), pages 631-641, November.
    13. Fehn, Rainer, 2002. "Arbeitsmarktflexibilisierung und Arbeitslosigkeit," Discussion Paper Series 54, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    14. Mr. Martin Schindler & Ms. Mariya Aleksynska, 2011. "Labor Market Regulations in Low-, Middle- and High-Income Countries: A New Panel Database," IMF Working Papers 2011/154, International Monetary Fund.
    15. Ofer Setty: Tel Aviv University, 2011. "Unemployment Accounts," 2011 Meeting Papers 204, Society for Economic Dynamics.
    16. A. Lans Bovenberg & Peter Birch Sørensen, 2004. "Improving the Equity-Efficiency Trade-Off: Mandatory Savings Accounts for Social Insurance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(4), pages 507-529, August.
    17. Bovenberg, A L, 2003. "Financing Retirement in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 713-734, November.
    18. Sebastian Koehne & Moritz Kuhn, 2015. "Should unemployment insurance be asset-tested?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 575-592, July.
    19. Brown, Alessio J.G. & Merkl, Christian & Snower, Dennis J., 2011. "Comparing the effectiveness of employment subsidies," Labour Economics, Elsevier, vol. 18(2), pages 168-179, April.
    20. A. Bovenberg & Martin Hansen & Peter Sørensen, 2008. "Individual savings accounts for social insurance: rationale and alternative designs," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(1), pages 67-86, February.

    More about this item

    Keywords

    Unemployment accounts; Redistribution; Employment; Unemployment; Unemployment benefits;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:ifwkwp:1274. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/iwkiede.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.