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Unemployment accounts and employment incentives

Author

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  • Brown, Alessio J. G.
  • Orszag, Jonathan Michael
  • Snower, Dennis J.

Abstract

We explore the far-reaching implications of replacing current unemployment benefit (UB) systems by an unemployment accounts (UA) system. Under the UA system, employed people are required to make ongoing contributions to their UAs and the balances in these accounts are available to them during periods of unemployment. The government is able to undertake balanced-budget interpersonal redistributions among the UAs. At the end of their working lives, people could transfer the remaining balances on their UAs into their pensions. We present an analytical framework to analyse the incentive e.ects of UAs and calibrate our model for the high unemployment countries of Europe. Our results suggest that this policy reform would significantly change people’s employment incentives and could achieve reductions in unemployment without reducing the level of support to the unemployed.

Suggested Citation

  • Brown, Alessio J. G. & Orszag, Jonathan Michael & Snower, Dennis J., 2006. "Unemployment accounts and employment incentives," Kiel Working Papers 1274, Kiel Institute for the World Economy (IfW).
  • Handle: RePEc:zbw:ifwkwp:1274
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    References listed on IDEAS

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    Cited by:

    1. Boeri, Tito & Jimeno, Juan Francisco, 2015. "The unbearable divergence of unemployment in Europe," LSE Research Online Documents on Economics 65001, London School of Economics and Political Science, LSE Library.
    2. Dennis J. Snower & Alessio J. G. Brown & Christian Merkl, 2009. "Globalization and the Welfare State: A Review of Hans-Werner Sinn's Can Germany Be Saved?," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 136-158, March.
    3. Parsons, Donald O., 2016. "Job Displacement Insurance: A Policy Typology," IZA Discussion Papers 9865, Institute for the Study of Labor (IZA).
    4. Fisher, Walter H. & Keuschnigg, Christian, 2011. "Life-Cycle Unemployment, Retirement, and Parametric Pension Reform," Economics Series 267, Institute for Advanced Studies.
    5. Brown, Alessio J. G. & Snower, Dennis J., 2009. "Incentives and complementarities of flexicurity," Kiel Working Papers 1526, Kiel Institute for the World Economy (IfW).
    6. Martin Feldstein & Daniel Altman, 2007. "Unemployment Insurance Savings Accounts," NBER Chapters,in: Tax Policy and the Economy, Volume 21, pages 35-64 National Bureau of Economic Research, Inc.
    7. 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).
    8. Boeri, Tito & Jimeno, Juan F., 2016. "Learning from the Great Divergence in unemployment in Europe during the crisis," Labour Economics, Elsevier, vol. 41(C), pages 32-46.
    9. David A. Robalino, 2014. "Designing unemployment benefits in developing countries," IZA World of Labor, Institute for the Study of Labor (IZA), pages 1-15, July.
    10. Bruno Coquet, 2017. "Les allocations chômage devraient-elles être dégressives ?," Sciences Po publications info:hdl:2441/2vagho9cns9, Sciences Po.
    11. Ofer Setty: Tel Aviv University, 2011. "Unemployment Accounts," 2011 Meeting Papers 204, Society for Economic Dynamics.
    12. David Robalino & Michael Weber, 2013. "Designing and implementing unemployment benefit systems in middle and low income countries: beyond risk-pooling vs savings," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-20, December.
    13. 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.

    More about this item

    Keywords

    Unemployment accounts; Redistribution; Employment; Unemployment; Unemployment benefits;

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • 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
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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