Abstract

http://ssrn.com/abstract=921874
 
 

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Unemployment Accounts and Employment Incentives


Alessio J.G. Brown


Kiel Institute for the World Economy

J. Michael Orszag


Towers Watson - Reigate (Surrey Office); Institute for the Study of Labor (IZA)

Dennis J. Snower


University of Kiel - Institute for World Economics (IfW); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

June 2006

CEPR Discussion Paper No. 5692

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.

Number of Pages in PDF File: 26

Keywords: Unemployment benefits, unemployment accounts, redistribution, employment, unemployment

JEL Classification: I38, J22, J32, J38, J64, J65, J68

working papers series


Date posted: August 4, 2006  

Suggested Citation

Brown, Alessio J.G. and Orszag, J. Michael and Snower, Dennis J., Unemployment Accounts and Employment Incentives (June 2006). CEPR Discussion Paper No. 5692. Available at SSRN: http://ssrn.com/abstract=921874

Contact Information

Alessio J.G. Brown
Kiel Institute for the World Economy ( email )
D-24105 Kiel
Germany
+49 431 8814 259 (Phone)
+49 431 8814 501 (Fax)
HOME PAGE: http://www.ifw-kiel.de/
J. Michael Orszag
Towers Watson - Reigate (Surrey Office) ( email )
Watson House
London Road
Reigate, Surrey, RH2 9PQ
United Kingdom
+44 1737 241144 (Phone)
+44 1737 241496 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Dennis J. Snower (Contact Author)
University of Kiel - Institute for World Economics (IfW) ( email )
Duesternbrooker Weg 120
D-24118 Kiel
Germany
+49+431-8814-235 (Phone)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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