Active Unemployment Insurance

Knut Røed ()

No 41, IZA Policy Papers from Institute of Labor Economics (IZA)

Abstract: The paper argues that a comprehensive activation strategy is called for – in both unemployment and disability insurance – to minimize the conflict between income insurance and work incentives and to prevent the economic crisis from causing a long-lasting decline in labor force participation. A review of recent empirical evidence, particularly from the Scandinavian countries indicates that "mild" activation requirements effectively counteract moral hazard problems in social insurance. The paper also argues that the distinction between unemployment and disability is blurred, and that both temporary and permanent disability insurance programs should be designed to encourage and support the use of remaining (partial) work capacity.

Keywords: ALMP; unemployment insurance; disability insurance; moral hazard; activation (search for similar items in EconPapers)
JEL-codes: H55 J65 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2012-05
New Economics Papers: this item is included in nep-ias and nep-lab
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Published - published in: IZA Journal of Labor Policy, 2012, 1:8, [Open Access]

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