Unemployment Insurance Savings Accounts: An Overview

Fransesca Valentini

No 1136, Discussion Papers from The Research Institute of the Finnish Economy

Abstract: Unemployment insurance and job protection regulations provide assistance to those who face unemployment. Unemployment insurance seems more desirable, since it does not harm flexibility in the labour markets, but it entails a moral hazard risk. Making the unemployment insurance voluntary and private would create more problems related mostly to the nature of the unemployment risk and to asymmetric information. Instead, it would sound more desirable to improve the design of unemployment insurance in a way that it would protect the individuals without harming flexibility and incentives for job seekers and job owners. Against this background, Unemployment Insurance Savings Accounts (UISA) have been proposed by a number of scholars. This paper provides a literature review of the theoretical properties of the UISA and analyses the current experience of Chile. It then investigates the similarities and differences between this UISA system and the severance payment savings account reforms recently implemented in Austria and Colombia. In light of both the theoretical and the practical perspectives, the UISA seem a valuable option, since they provide insurance without excessively harming the incentives of the individuals, offering security without impeding the flexibility in the labour markets.

Keywords: unemployment insurance; savings accounts; UISA; Chile; severance pay reform; funded scheme (search for similar items in EconPapers)
JEL-codes: H53 H55 I38 J65 J68 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2008
New Economics Papers: this item is included in nep-ias
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Citations: View citations in EconPapers (1)

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