Unemployment Benefits and Activation in Federal Welfare States: An Institutional Moral Hazard Perspective

Regional & Federal Studies, 2020 DOI;10.1080/13597566.2020.1751127

Posted: 9 Jun 2020

See all articles by Chris Luigjes

Chris Luigjes

University of Amsterdam

Frank Vandenbroucke

University of Amsterdam

Date Written: April 15, 2020

Abstract

Subnational governments have become more involved in the ‘regulation of unemployment’ (the design, implementation and financing of unemployment-related benefits and activation), partly because they are thought to be better placed to activate the unemployed than federal governments. However, depending on its specific design, decentralization can reduce the incentives subnational governments have to implement effective activation. Such ‘institutional moral hazard’ is not yet systematically theorized. We examine how and to what extent it affects three federal countries. We distinguish three factors that influence whether institutional moral hazard is perceived as a problem and how it can be resolved. We identify two types of subnational challenges to federal control.

Keywords: Institutional moral hazard, multi-tiered welfare states, intergovernmental relations, federalism, unemployment insurance, social assistance, active labour market policies

Suggested Citation

Luigjes, Chris and Vandenbroucke, Frank, Unemployment Benefits and Activation in Federal Welfare States: An Institutional Moral Hazard Perspective (April 15, 2020). Regional & Federal Studies, 2020 DOI;10.1080/13597566.2020.1751127, Available at SSRN: https://ssrn.com/abstract=3577697

Chris Luigjes

University of Amsterdam ( email )

Spui 21
Amsterdam, 1018 WB
Netherlands

Frank Vandenbroucke (Contact Author)

University of Amsterdam ( email )

Spui 21
Amsterdam, 1012 WX
Netherlands
+31 (0)20 525 6037 (Phone)

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