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Benefit Reentitlement Conditions in Unemployment Insurance Schemes

Author

Listed:
  • Andersen, Torben M.

    (Aarhus University)

  • Kristoffersen, Mark Strom

    (Aarhus University)

  • Svarer, Michael

    (Aarhus University)

Abstract

Unemployment insurance schemes include conditions on past employment history as part of the eligibility conditions. This aspect is often neglected in the literature which primarily focuses on benefit levels and benefit duration. In a search-matching framework we show that benefit duration and employment requirements are substitute instruments in affecting job search incentives and thus gross unemployment. We analyse the optimal design of the unemployment insurance system (benefit levels, duration and employment requirements) under a utilitarian social welfare function. Simulations show that a higher insurance motive captured by more risk aversion implies higher benefit generosity and more lax employment requirements but also shortened benefit duration.

Suggested Citation

  • Andersen, Torben M. & Kristoffersen, Mark Strom & Svarer, Michael, 2015. "Benefit Reentitlement Conditions in Unemployment Insurance Schemes," IZA Discussion Papers 8991, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8991
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    References listed on IDEAS

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    1. Peter Fredriksson & Bertil Holmlund, 2006. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 357-386, July.
    2. Andersen, Torben M. & Svarer, Michael, 2009. "Business cycle dependent unemployment insurance," Kiel Working Papers 1498, Kiel Institute for the World Economy (IfW).
    3. Fredriksson, Peter & Holmlund, Bertil, 2001. "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 370-399, April.
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    9. Mitman, Kurt & Rabinovich, Stanislav, 2015. "Optimal unemployment insurance in an equilibrium business-cycle model," Journal of Monetary Economics, Elsevier, vol. 71(C), pages 99-118.
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    More about this item

    Keywords

    reentitlement effects; unemployment insurance; business cycle;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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