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Persistent Unemployment and the Generosity of Welfare States

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  • Derek Messacar

Abstract

Generous unemployment benefits are a conventional explanation of the high rates of unemployment in many OECD countries. However, this perception has been challenged on the basis that cross-national evidence comes only from regression analyses of unemployment on the OECD's gross replacement rate but that results are not robust to improved, multidimensional measures of generosity. In this article, I conduct a detailed empirical analysis of how social welfare programs affect unemployment in 17 OECD countries, from 1975 to 2000, using a detailed concept of labor "decommodification" to make cross-national comparisons of generosity. The results show that unemployment benefits remain an important, robust determinant of unemployment even when the new measure is used.

Suggested Citation

  • Derek Messacar, 2014. "Persistent Unemployment and the Generosity of Welfare States," Review of Social Economy, Taylor & Francis Journals, vol. 72(3), pages 379-415, September.
    • Handle: RePEc:taf:rsocec:v:72:y:2014:i:3:p:379-415
    DOI: 10.1080/00346764.2014.927723
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    References listed on IDEAS

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    1. Luca Nunziata, 2002. "Unemployment, Labour Market Institutions and Shocks," Economics Papers 2002-W16, Economics Group, Nuffield College, University of Oxford.
    2. Sargent, Thomas & Ljungqvist, Lars, 2005. "Jobs and Unemployment in Macroeconomic Theory: A Turbulence Laboratory," CEPR Discussion Papers 5340, Centre for Economic Policy Research.
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