IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Income support systems for the unemployed : issues and options

  • Vodopivec, Milan
  • Raju, Dhushyanth

The report reviews the performance of various income support systems for the unemployed, and provides guidelines for developing and transition economies. It finds that: a) Unemployment insurance enables a high degree of consumption smoothing, performs well under various types of shocks, and acts as an automatic stabilizer. But it also creates reemployment disincentives, and wage pressure which increase the equilibrium unemployment rate, contributing to persistent unemployment. b) Unemployment assistance, while enabling more effective targeting, may not bring savings in comparison to unemployment insurance, and may well prove fiscally unsustainable. c) Unemployment insurance savings accounts, internalize the costs of unemployment benefits, and thus avoid the moral hazard inherent in traditional unemployment insurance, given the weak monitoring capacity of developing countries, an important advantage. d) Public works program is effective in reaching the poor, can attract informal sector workers, and provides flexible, fast responses to shocks. Despite its high non-wage costs, and possible stigmatization of participants, it is found suitable for developing countries, particularly as a complementary program. e) Severance pay offers few advantages - it adversely affects efficiency, produces high litigation costs, and offers limited risk-pooling.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2003/03/29/000094946_03031404073881/Rendered/PDF/multi0page.pdf
Download Restriction: no

Paper provided by The World Bank in its series Social Protection Discussion Papers with number 25529.

as
in new window

Length:
Date of creation: 31 May 2002
Date of revision:
Handle: RePEc:wbk:hdnspu:25529
Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Sandrine Cazes & Stefano Scarpetta, 1998. "Labour market transitions and unemployment duration: Evidence from Bulgarian and Polish micro-data," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 6(1), pages 113-144, 05.
  2. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-59, September.
  3. Addison, John T. & Barrett, Charles Richard & Siebert, William Stanley, 1998. "Mandated benefits, welfare, and heterogeneous firms," ZEW Discussion Papers 98-46, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Lindbeck, Assar, 1995. "Hazardous Welfare-State Dynamics," Working Paper Series 428, Research Institute of Industrial Economics.
  5. repec:ese:iserwp:2000-05 is not listed on IDEAS
  6. Boone, J. & Fredriksson, P. & Holmlund, B. & van Ours, J.C., 2007. "Optimal unemployment insurance with monitoring and sanctions," Other publications TiSEM f2b1b916-41f5-4964-bad8-3, Tilburg University, School of Economics and Management.
  7. John C. Ham & Samuel Rea, 1986. "Unemployment Insurance and Male Unemployment Duration in Canada," Working Papers 592, Princeton University, Department of Economics, Industrial Relations Section..
  8. Burdett, Kenneth & Wright, Randall, 1989. "Optimal firm size, taxes, and unemployment," Journal of Public Economics, Elsevier, vol. 39(3), pages 275-287, August.
  9. Rebecca M. Blank & Richard B. Freeman, 1994. "Evaluating the Connection between Social Protection and Economic Flexibility," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 21-42 National Bureau of Economic Research, Inc.
  10. Lawrence F. Katz & Bruce D. Meyer, 1988. "The Impact of the Potential Duration of Unemployment Benefits on the Duration of Unemployment," NBER Working Papers 2741, National Bureau of Economic Research, Inc.
  11. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
  12. Daron Acemoglu & Robert Shimer, 1999. "Productivity Gains from Unemployment Insurance," NBER Working Papers 7352, National Bureau of Economic Research, Inc.
  13. Dennis J. Snower & David T. Coe, 1996. "Policy Complementarities; The Case for Fundamental Labor Market Reform," IMF Working Papers 96/93, International Monetary Fund.
  14. Kathleen P. Classen, 1977. "The effect of unemployment insurance on the duration of unemployment and subsequent earnings," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 438-444, July.
  15. Belot, Michèle & van Ours, Jan C., 2000. "Does the Recent Success of Some OECD Countries in Lowering their Unemployment Rates Lie in the Clever Design of their Labour Market Reform?," IZA Discussion Papers 147, Institute for the Study of Labor (IZA).
  16. Catalin Pauna & John S. Earle, 1998. "Long-term unemployment, social assistance and labor market policies in Romania," Empirical Economics, Springer, vol. 23(1/2), pages 203-235.
  17. Olivier Blanchard & Pedro Portugal, 1998. "What Hides Behind an Umemployment Rate: Comparing Portuguese and U.S. Unemployment," NBER Working Papers 6636, National Bureau of Economic Research, Inc.
  18. Carling, Kenneth & Edin, Per-Anders & Harkman, Anders & Holmlund, Bertil, 1996. "Unemployment duration, unemployment benefits, and labor market programs in Sweden," Journal of Public Economics, Elsevier, vol. 59(3), pages 313-334, March.
  19. Aghion, P. & Blanchard, O.J., 1993. "On the Speed of Transition in Central Europe," Working papers 93-8, Massachusetts Institute of Technology (MIT), Department of Economics.
  20. Heer, Burkhard, 2003. "Employment and Welfare Effects of a Two-Tier Unemployment Compensation System," International Tax and Public Finance, Springer, vol. 10(2), pages 147-68, March.
  21. Stephen T. Marston, 1975. "The Impact of Unemployment Insurance on Job Search," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 6(1), pages 13-60.
  22. Ham, John C & Svejnar, Jan & Terrell, Katherine, 1998. "Unemployment and the Social Safety Net during Transitions to a Market Economy: Evidence from the Czech and Slovak Republics," American Economic Review, American Economic Association, vol. 88(5), pages 1117-42, December.
  23. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
  24. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
  25. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  26. George M. Von Furstenberg, 1976. "Stabilization characteristics of unemployment insurance," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 29(3), pages 363-376, April.
  27. Daniel S. Hamermesh & Daniel T. Slesnick, 1995. "Unemployment Insurance and Household Welfare: Microeconomic Evidence 1980-93," NBER Working Papers 5315, National Bureau of Economic Research, Inc.
  28. Richard B. Freeman, 1992. "What Directions for Labor Market Institutions in Eastern and Central Europe?," NBER Working Papers 4209, National Bureau of Economic Research, Inc.
  29. Wright, Randall, 1986. "The redistributive roles of unemployment insurance and the dynamics of voting," Journal of Public Economics, Elsevier, vol. 31(3), pages 377-399, December.
  30. Fretwell, David H. & Benus, Jacob & O'Leary, Christopher J., 1999. "Evaluating the impact of active labor programs : results of cross country studies in Europe and Central Asia," Social Protection Discussion Papers 20131, The World Bank.
  31. Hassler, John & Rodríguez Mora, José Vicente & Storesletten, Kjetil & Zilibotti, Fabrizio, 1999. "Equilibrium Unemployment Insurance," CEPR Discussion Papers 2126, C.E.P.R. Discussion Papers.
  32. John M. Barron & Wesley Mellow, 1979. "Search Effort in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 389-404.
  33. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780198284345, March.
  34. Arsenio M. Balisacan, 2001. "Poverty in the Philippines : An Update and Reexamination," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 38(1), pages 15-52, June.
  35. Datt, Gaurav & Ravallion, Martin, 1994. "Transfer Benefits from Public-Works Employment: Evidence for Rural India," Economic Journal, Royal Economic Society, vol. 104(427), pages 1346-69, November.
  36. Jonathan Gruber, 1999. "The Wealth of the Unemployed: Adequacy and Implications for Unemployment Insurance," NBER Working Papers 7348, National Bureau of Economic Research, Inc.
  37. Martina Lubyova & Jan C. van Ours, 1999. "Unemployment durations of job losers in a labour market in transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(3), pages 665-686, November.
  38. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
  39. Fredriksson, Peter & Holmlund, Bertil, 2001. "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 370-99, April.
  40. Blau, David M. & Robins, Philip K., 1986. "Job search, wage offers, and unemployment insurance," Journal of Public Economics, Elsevier, vol. 29(2), pages 173-197, March.
  41. Milan Vodopivec, 1998. "Does the Slovenian Public Work Program Increase Participants' Chances to Find a Job?," William Davidson Institute Working Papers Series 214, William Davidson Institute at the University of Michigan.
  42. Kugler, Adriana D. & Saint-Paul, Gilles, 2000. "Hiring And Firing Costs, Adverse Selection And The Persistence Of Unemployment," CEPR Discussion Papers 2410, C.E.P.R. Discussion Papers.
  43. Forteza, Alvaro & Rama, Martin, 2001. "Labor market"rigidity"and the success of economic reforms across more than one hundred countries," Policy Research Working Paper Series 2521, The World Bank.
  44. Daron Acemoglu & Robert Shimer, 1998. "Efficient Unemployment Insurance," NBER Working Papers 6686, National Bureau of Economic Research, Inc.
  45. José A. F. Machado & Pedro Portugal & Pedro S. Raposo, 2010. "Joblessness," Working Papers w201033, Banco de Portugal, Economics and Research Department.
  46. Diamond, Peter A, 1981. "Mobility Costs, Frictional Unemployment, and Efficiency," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 798-812, August.
  47. Philippe Aghion & Olivier Jean Blanchard, 1994. "On the Speed of Transition Central Europe," NBER Working Papers 4736, National Bureau of Economic Research, Inc.
  48. Martin Feldstein & Daniel Altman, 1998. "Unemployment Insurance Savings Accounts," NBER Working Papers 6860, National Bureau of Economic Research, Inc.
  49. Addison, John T. & Blackburn, McKinley L., 2000. "The effects of unemployment insurance on postunemployment earnings," Labour Economics, Elsevier, vol. 7(1), pages 21-53, January.
  50. Ehrenberg, Ronald G & Oaxaca, Ronald L, 1976. "Unemployment Insurance, Duration of Unemployment, and Subsequent Wage Gain," American Economic Review, American Economic Association, vol. 66(5), pages 754-66, December.
  51. Finis Welch, 1977. "What have we learned from empirical studies of unemployment insurance?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 451-461, July.
  52. Vodopivec, Milan, 1995. "Unemployment insurance and duration of unemployment : evidence from Slovenia's transition," Policy Research Working Paper Series 1552, The World Bank.
  53. Addison, John T. & Teixeira, Paulino, 2001. "The Economics of Employment Protection," IZA Discussion Papers 381, Institute for the Study of Labor (IZA).
  54. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-82, July.
  55. repec:cup:cbooks:9780521360531 is not listed on IDEAS
  56. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  57. Card, David & Levine, Phillip B., 1994. "Unemployment insurance taxes and the cyclical and seasonal properties of unemployment," Journal of Public Economics, Elsevier, vol. 53(1), pages 1-29, January.
  58. Paul L. Burgess & Jerry L. Kingston, 1976. "The impact of unemployment insurance benefits on reemployment success," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(1), pages 25-31, October.
  59. Rama, Martin, 1999. "Public Sector Downsizing: An Introduction," World Bank Economic Review, World Bank Group, vol. 13(1), pages 1-22, January.
  60. Morduch, Jonathan, 1999. "Between the State and the Market: Can Informal Insurance Patch the Safety Net?," World Bank Research Observer, World Bank Group, vol. 14(2), pages 187-207, August.
  61. Patricia M. Anderson & Bruce D. Meyer, 1994. "The Effects of Unemployment Insurance Taxes and Benefits on Layoffs Using Firm and Individual Data," NBER Working Papers 4960, National Bureau of Economic Research, Inc.
  62. Moffitt, Robert, 1985. "Unemployment insurance and the distribution of unemployment spells," Journal of Econometrics, Elsevier, vol. 28(1), pages 85-101, April.
  63. Hopenhayn, H. & Nicolini, P.J., 1996. "Optimal Unemployment Insurance," RCER Working Papers 421, University of Rochester - Center for Economic Research (RCER).
  64. Feldstein, Martin S, 1978. "The Effect of Unemployment Insurance on Temporary Layoff Unemployment," American Economic Review, American Economic Association, vol. 68(5), pages 834-46, December.
  65. Gruber, Jonathan & Wise, David, 1998. "Social Security and Retirement: An International Comparison," American Economic Review, American Economic Association, vol. 88(2), pages 158-63, May.
  66. Holmlund, B., 1997. "Unemployment Insurance in Theory and Practice," Papers 1997-25, Uppsala - Working Paper Series.
  67. Arlene Holen, 1977. "Effects of unemployment insurance entitlement on duration and job search outcome," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 445-450, July.
  68. Boheim, Rene & Taylor, Mark P., 2002. "The search for success: do the unemployed find stable employment?," Labour Economics, Elsevier, vol. 9(6), pages 717-735, December.
  69. Snower, Dennis J., 1994. "The Simple Economics of Benefit Transfers," CEPR Discussion Papers 1086, C.E.P.R. Discussion Papers.
  70. Michele Boldrin & Juan J. Dolado & Juan F. Jimeno & Franco Peracchi, 1999. "The future of pensions in Europe," Economic Policy, CEPR;CES;MSH, vol. 14(29), pages 287-320, October.
  71. Bird, Edward J & Hagstrom, Paul A, 1999. "The Wealth Effects of Income Insurance," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(3), pages 339-52, September.
  72. Cahuc, Pierre & Lehmann, Etienne, 2000. "Should unemployment benefits decrease with the unemployment spell?," Journal of Public Economics, Elsevier, vol. 77(1), pages 135-153, July.
  73. K. Subbarao, 1997. "Public Works as an Anti-Poverty Program: An Overview of Cross-Country Experience," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 678-683.
  74. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
  75. Woden, Q.T. & Ayres, W. & Barenstein, M. & Hicks, N. & Lee, K. & Maloney, W. & Peeters, P. & Siaens, C. & Yitzjaki, S., 2000. "Poverty and Policy in Latin America and Caribeean," Papers 467, World Bank - Technical Papers.
  76. Attanasio, Orazio & Rios-Rull, Jose-Victor, 2000. "Consumption smoothing in island economies: Can public insurance reduce welfare?," European Economic Review, Elsevier, vol. 44(7), pages 1225-1258, June.
  77. Barr, Nicholas, 1992. "Economic Theory and the Welfare State: A Survey and Interpretation," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 741-803, June.
  78. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-57, October.
  79. Ravallion, Martin & Lokshin, Michael, 1999. "Who wants to redistribute? Russia's tunnel effect in the 1990's," Policy Research Working Paper Series 2150, The World Bank.
  80. Anderson, Patricia M & Meyer, Bruce D, 1993. "Unemployment Insurance in the United States: Layoff Incentives and Cross Subsidies," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages S70-95, January.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wbk:hdnspu:25529. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Raiden C. Dillard)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.