Measuring Unemployment Insurance Generosity

Stephane Pallage (), Lyle Scruggs () and Christian Zimmermann ()

No 3868, IZA Discussion Papers from Institute for the Study of Labor (IZA)

Abstract: In this paper, we develop a methodology to summarize the various policy parameters of an unemployment insurance scheme into a single generosity parameter. Unemployment insurance policies are multdimensional objects. They are typically defined by waiting periods, eligibility duration, benefit levels and asset tests when eligible, which makes intertemporal or international comparisons difficult. To make things worse, labor market conditions, such as the likelihood and duration of unemployment matter when assessing the generosity of different policies. We build a first model with such complex characteristics. Our model features heterogeneous agents that are liquidity constrained but can self-insure. We then build a second model that is similar, except that the unemployment insurance is simpler: it is deprived of waiting periods and agents are eligible forever with constant benefits. We then determine which level of benefits in this second model makes agents indifferent between both unemployment insurance policies. We apply this strategy to the unemployment insurance program of the United Kingdom and study how its generosity evolved over time.

Keywords: unemployment insurance; labor market policy evaluation (search for similar items in EconPapers)
JEL-codes: E24 J65 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-ias, nep-lab and nep-ltv
Date: 2008-12
View list of references

Downloads: (external link)
http://ftp.iza.org/dp3868.pdf (application/pdf)

Related works:
Working Paper: Measuring Unemployment Insurance Generosity (2008)
Working Paper: Measuring Unemployment Insurance Generosity (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:iza:izadps:dp3868

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute for the Study of Labor (IZA)
Address: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Contact information at EDIRC.
Series data maintained by Mark Fallak ().