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From Unemployment Benefits to Unemployment Accounts


  • Orszag, Mike

    () (Towers Watson)

  • Snower, Dennis J.

    () (Kiel Institute for the World Economy)


We explore the implications of replacing current unemployment benefit (UB) systems by unemployment accounts (UA). Under the UA system, employed people would be required to make ongoing contributions to their unemployment accounts, and the balances in these accounts would then be available to them during periods of unemployment. The government would be able to undertake balanced-budget redistributions among the UAs, taxing the contributions of the rich and subsidizing those of the poor. When people retire, they could use their remaining UA balances to top up their pensions. Under the unemployment benefit system, people are in effect rewarded for being unemployed (through the unemployment benefits) and penalized for being employed (through the taxes that finance the unemployment benefits). The UA system alleviates these externality problems. For when an unemployed person makes withdrawals from his UA, he is thereby diminishing the amount of funds that are available to him later on.

Suggested Citation

  • Orszag, Mike & Snower, Dennis J., 2002. "From Unemployment Benefits to Unemployment Accounts," IZA Discussion Papers 532, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp532

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    1. repec:iab:iabzaf:v:38:i:2/3:p:373-382 is not listed on IDEAS
    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. Fölster, Stefan & Gidehag, Robert & Orszag, Mike & Snower, Dennis J., 2002. "Assessing Welfare Accounts," CEPR Discussion Papers 3479, C.E.P.R. Discussion Papers.
    4. Lutz, Roman, 2006. "Was spricht eigentlich gegen eine private Arbeitslosenversicherung?," IAB Discussion Paper 200624, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. 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.
    6. Goerke, Laszlo, 2007. "Unemployment Insurance Savings Accounts and Collective Wage Determination," IZA Discussion Papers 3141, Institute for the Study of Labor (IZA).
    7. Markus Knell, 2005. "Demographic Fluctuations, Sustainability Factors and Intergenerational Fairness – An Assessment of Austria's New Pension System," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 23-42.
    8. Sesselmeier, Werner & Somaggio, Gabriele & Yollu, Aysel, 2006. "Mögliche Implikationen der gegenwärtigen Arbeitsmarktreformen für die zukünftige Entwicklung der Arbeitslosenversicherung," Arbeitspapiere 126, Hans-Böckler-Stiftung, Düsseldorf.
    9. Nagler, Paula, 2015. "The impact of unemployment insurance savings accounts on subsequent employment quality," MERIT Working Papers 026, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Breyer, Friedrich & Franz, Wolfgang & Homburg, Stefan & Schnabel, Reinhold & Wille, Eberhard, 2004. "Reform der sozialen Sicherung," EconStor Books, ZBW - German National Library of Economics, number 92399, March.
    11. von Berchem, Sascha & Berthold, Norbert, 2004. "Reform der Arbeitslosenversicherung : Markt, Staat oder beides?," Discussion Paper Series 70, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    12. Rürup, Bert, 2005. "Arbeitslosenversicherung: Staatlich, privat oder gemischt? (Unemployment insurance * state-run, private or a combination of both?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 373-382.
    13. Goerke, Laszlo & Madsen, Jakob B., 2003. "Earnings-Related Unemployment Benefits in a Unionised Economy," IZA Discussion Papers 701, Institute for the Study of Labor (IZA).

    More about this item


    unemployment benefits; unemployment accounts; redistribution; employment; unemployment; pensions;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • 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
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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