Unemployment Accounts and Employment Incentives

Dennis Snower, Mike Orszag and Alessio Brown

No 5692, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 effects 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.

Keywords: Unemployment benefits; Unemployment accounts; Redistribution; Employment; Unemployment (search for similar items in EconPapers)
JEL-codes: I38 J22 J32 J38 J64 J65 J68 (search for similar items in EconPapers)
Date: 2006-06
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (10)

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Related works:
Journal Article: Unemployment accounts and employment incentives (2008)
Working Paper: Unemployment Accounts and Employment Incentives (2006)
Working Paper: Unemployment accounts and employment incentives (2006)
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