Measuring Unemployment Insurance Generosity

Stephane Pallage, Lyle Scruggs and Christian Zimmermann

No 3868, IZA Discussion Papers from Institute of Labor Economics (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: labor market policy evaluation; unemployment insurance (search for similar items in EconPapers)
JEL-codes: E24 J65 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2008-12
New Economics Papers: this item is included in nep-dge, nep-ias, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Political Analysis, 2013, 21(4), 524-549

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https://docs.iza.org/dp3868.pdf (application/pdf)

Related works:
Journal Article: Measuring Unemployment Insurance Generosity (2013)
Working Paper: Measuring Unemployment Insurance Generosity (2009)
Working Paper: Measuring Unemployment Insurance Generosity (2008)
Working Paper: Measuring Unemployment Insurance Generosity (2008)
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