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Unemployment insurance and unemployment assistance : a comparison

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  • Vroman, Wayne

Abstract

This report examines the two most common programs that provide cash compensation to unemployed workers: unemployment insurance (UI) and unemployment assistance (UA). It compares them in two areas: costs and labor market disincentives. The cost analysis first derives a framework for examining costs, and then applies the framework to both UI and UA programs. Costs are estimated for several countries, but particular attention is given to Australia, Canada and the United States. A major finding is that UA is not necessarily less costly than UI even though UA conditions eligibility on household income and assets. One must examine the specifics of a country's situation to make a cost comparison. The analysis of labor market disincentive effects reviews much of the relevant literature. It notes that the disincentive effects are present for both UI and UA but that the disincentives are different for the two types of unemployment protection programs.

Suggested Citation

  • Vroman, Wayne, 2002. "Unemployment insurance and unemployment assistance : a comparison," Social Protection Discussion Papers and Notes 24084, The World Bank.
    • Handle: RePEc:wbk:hdnspu:24084
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    Cited by:

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    2. Milan Vodopivec, 2004. "Income Support for the Unemployed : Issues and Options," World Bank Publications - Books, The World Bank Group, number 14922, December.
    3. Schroyen, Fred & Aarbu, Karl Ove, 2017. "Attitudes towards large income risk in welfare states: an international comparison," Discussion Paper Series in Economics 20/2017, Norwegian School of Economics, Department of Economics.
    4. Mr. Martin Schindler & Ms. Mariya Aleksynska, 2011. "Labor Market Regulations in Low-, Middle- and High-Income Countries: A New Panel Database," IMF Working Papers 2011/154, International Monetary Fund.
    5. World Bank, 2007. "Armenia - Labor Market Dynamics : Volume 2. Main Report," World Bank Publications - Reports 7846, The World Bank Group.
    6. Christopher Bajada & Friedrich Schneider, 2009. "Unemployment and the Shadow Economy in the oecd," Revue économique, Presses de Sciences-Po, vol. 60(5), pages 1033-1067.
    7. Milan Vodopivec, 2006. "Choosing a System of Unemployment Income Support: Guidelines for Developing and Transition Countries," The World Bank Research Observer, World Bank, vol. 21(1), pages 49-89.
    8. Joanna Tyrowicz & Piotr Wojcik, 2010. "Active Labour Market Policies and Unemployment Convergence in Transition," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 2(1), pages 46-72, January.
    9. Fred Schroyen & Karl Ove Aarbu, 2018. "Attitudes Towards Large Income Risk in Welfare States: An International Comparison," Economica, London School of Economics and Political Science, vol. 85(340), pages 846-872, October.
    10. Milan Vodopevic, 2004. "Comparing Unemployment Insurance and Unemployment Assistance," World Bank Publications - Reports 11811, The World Bank Group.

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