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Integration of Unemployment Insurance with Retirement Insurance

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  • Joseph Stiglitz
  • Jungyoll Yun

Abstract

This paper analyzes a social insurance system that integrates unemployment insurance with a pension program through an individual account, allowing workers to borrow against their future wage income to finance consumption during an unemployment episode and thus improving their search incentives while reducing risks. This paper identifies factors which determine the optimal degree of integration. A fully integrated system is one in which no reliance is placed at all on a separate tax-funded unemployment insurance program. We show that when the duration of unemployment is very short compared to the period of employment or retirement, the optimal system involves an exclusive reliance on pension-funded self-insurance. This system imposes a negligible risk burden for workers while avoiding attenuating search incentives. We also argue that a joint integration of several social insurance programs with a pension program through an individual account is desirable unless the risks are perfectly correlated to each other.

Suggested Citation

  • Joseph Stiglitz & Jungyoll Yun, 2002. "Integration of Unemployment Insurance with Retirement Insurance," NBER Working Papers 9199, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9199
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    References listed on IDEAS

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    12. Richard Arnott & Joseph Stiglitz, 1986. "The Welfare Economics of Moral Hazard," Working Papers 635, Queen's University, Department of Economics.
    13. Arnott, Richard J & Stiglitz, Joseph E, 1988. " The Basic Analytics of Moral Hazard," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(3), pages 383-413.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Is There Room for Compromise on Unemployment Insurance?
      by Matt Mitchell in Neighborhood Effects on 2010-12-02 04:00:05

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    1. repec:iab:iabzaf:v:38:i:2/3:p:373-382 is not listed on IDEAS
    2. Brown, Alessio J.G. & Orszag, J. Michael & Snower, Dennis J., 2008. "Unemployment accounts and employment incentives," European Journal of Political Economy, Elsevier, vol. 24(3), pages 587-604, September.
    3. Alfonso Sánchez-Martin & J. García-Pérez & Sergi Jiménez-Martín, 2014. "Delaying the Normal and Early Retirement Ages in Spain: Behavioural and Welfare Consequences for Employed and Unemployed Workers," De Economist, Springer, vol. 162(4), pages 341-375, December.
    4. Hairault, Jean-Olivier & Langot, François & Ménard, Sébastien & Sopraseuth, Thepthida, 2012. "Optimal unemployment insurance for older workers," Journal of Public Economics, Elsevier, vol. 96(5), pages 509-519.
    5. 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.
    6. 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.
    7. Robalino, David & Vodopivec, Milan & Bodor, Andras, 2009. "Savings for unemployment in good or bad times : options for developing countries," Social Protection and Labor Policy and Technical Notes 50320, The World Bank.
    8. Lans Bovenberg & Theo Nijman, 2009. "Developments in pension reform: the case of Dutch stand-alone collective pension schemes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 16(4), pages 443-467, August.
    9. 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.
    10. 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.
    11. 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].
    12. Joseph E. Stiglitz, 2015. "Towards a General Theory of Deep Downturns," NBER Working Papers 21444, National Bureau of Economic Research, Inc.
    13. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.
    14. A. Lans Bovenberg, 2004. "Die Vereinbarkeit von Beruf und Familie: Lösungen für die gesamte Lebenszeit," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(21), pages 17-29, November.
    15. José Ignacio García & Alfonso R. Sánchez Martín, 2008. "Social security and the search behaviour of workers approaching retirement," Economic Working Papers at Centro de Estudios Andaluces E2008/10, Centro de Estudios Andaluces.
    16. Sesselmeier, Werner & Somaggio, Gabriele & Yollu, Aysel, 2006. "Mögliche Implikationen der gegenwärtigen Arbeitsmarktreformen für die zukünftige Entwicklung der Arbeitslosenversicherung," Arbeitspapiere 126, Hans-Böckler-Stiftung, Düsseldorf.
    17. repec:hrv:faseco:34330197 is not listed on IDEAS
    18. 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.
    19. Ruud de Mooij, 2004. "Towards efficient unemployment insurance in the Netherlands," CPB Memorandum 100, CPB Netherlands Bureau for Economic Policy Analysis.
    20. Määttänen, Niku & Salminen, Tomi, 2015. "Unemployment Accounts - A Finnish Application," ETLA Working Papers 29, The Research Institute of the Finnish Economy.
    21. 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.
    22. 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.
    23. 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.
    24. A. Bovenberg, 2005. "Balancing Work and Family Life during the Life Course," De Economist, Springer, vol. 153(4), pages 399-423, December.

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