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Unemployment and workers' compensation programmes: rationale, design, labour supply and income support

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  • Bruce Meyer

Abstract

I examine the unemployment insurance (UI) and workers’ compensation (WC) insurance programmes, concentrating on labour supply, insurance and income redistribution. UI and WC increase the time employees spend out of work. Elasticities of lost work time that incorporate both the incidence and duration of claims are centred at 1.0 for UI and between 0.5 and 1.0 for WC. These elasticities are larger than elasticities typically found in studies of wage effects on hours worked by men, probably because UI and WC lead to short-run variation in wages with mostly a substitution effect and the programmes alter the participation margin. Some good evidence suggests that UI smooths the consumption of the unemployed and more clearly indicates that UI progressively redistributes resources. There is substantial evidence that injured workers suffer material hardships even with WC programmes, but research has not provided an overall picture of the insurance and redistributive aspects of WC.

Suggested Citation

  • Bruce Meyer, 2002. "Unemployment and workers' compensation programmes: rationale, design, labour supply and income support ," Fiscal Studies, Institute for Fiscal Studies, vol. 23(1), pages 1-49, March.
  • Handle: RePEc:ifs:fistud:v:23:y:2002:i:1:p:1-49
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    Citations

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    Cited by:

    1. Marinescu, Ioana, 2017. "The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 150(C), pages 14-29.
    2. Woock, Christopher, 2009. "Unions and the decision to apply for and the receipt of workers' compensation benefits," MPRA Paper 14689, University Library of Munich, Germany.
    3. Bruce Meyer & Wallace K. C. Mok, 2016. "Disability, Earnings, Income and Consumption," NBER Chapters,in: Social Insurance Programs (Trans-Atlantic Public Economic Seminar - TAPES) National Bureau of Economic Research, Inc.
    4. Ana Iturriza & Arjun S. Bedi & Robert Sparrow, 2011. "Unemployment Assistance and Transition to Employment in Argentina," Economic Development and Cultural Change, University of Chicago Press, vol. 59(4), pages 811-837.
    5. Hamish Low & Costas Meghir & Luigi Pistaferri, 2010. "Wage Risk and Employment Risk over the Life Cycle," American Economic Review, American Economic Association, vol. 100(4), pages 1432-1467, September.
    6. Bruno, VAN DER LINDEN, 2005. "Equilibrium Evaluation of Active Labor Market Programmes Enhancing Matching Effectiveness," Discussion Papers (ECON - Département des Sciences Economiques) 2005007, Université catholique de Louvain, Département des Sciences Economiques.
    7. Fitzenberger, Bernd & Wilke, Ralf A., 2007. "New insights on unemployment duration and post unemployment earnings in Germany: censored Box-Cox quantile regression at work," ZEW Discussion Papers 07-007, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    8. Kelly D. Edmiston, 2006. "Workers' Compensation and State Employment Growth," Journal of Regional Science, Wiley Blackwell, vol. 46(1), pages 121-145.
    9. Gabriele Cardullo & Bruno Van der Linden, 2007. "Employment Subsidies and Substitutable Skills: An Equilibrium Matching Approach," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(4), pages 375-404.
    10. Bruce D. Meyer & Wallace K. C. Mok, 2014. "A Short Review of Recent Evidence on the Disincentive Effects of Unemployment Insurance and New Evidence From New York State," National Tax Journal, National Tax Association, vol. 67(1), pages 219-252, March.
    11. Bruno, VAN DER LINDEN, 2003. "Unemployment insurance and training in an equilibrium matching model with heterogeneous agents," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003001, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    12. Bernd Fitzenberger & Ralf A. Wilke, 2010. "New Insights into Unemployment Duration and Post Unemployment Earnings in Germany," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(6), pages 794-826, December.
    13. Bronchetti, Erin Todd, 2012. "Workers' compensation and consumption smoothing," Journal of Public Economics, Elsevier, vol. 96(5), pages 495-508.
    14. Pierre Koning, 2004. "Estimating the impact of experience rating on the inflow into disability insurance in the Netherlands," CPB Discussion Paper 37, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Herkenhoff, Kyle F. & Ohanian, Lee E., 2016. "Foreclosure Delay and the U.S. Labor Market," Economic Policy Paper 16-7, Federal Reserve Bank of Minneapolis.
    16. Kyyrä, Tomi & Tuomala, Juha, 2013. "Does Experience Rating Reduce Disability Inflow?," IZA Discussion Papers 7344, Institute for the Study of Labor (IZA).
    17. Nordberg, Morten, 2007. "The Total Tax on Labour Income," Memorandum 05/2007, Oslo University, Department of Economics.

    More about this item

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related 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

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