Unemployment Benefit Profile, Monitoring and Active Labor Market Policies: The Role of Normative Criteria

Posted: 26 Apr 2005

See all articles by Bruno Van der Linden

Bruno Van der Linden

Université Catholique de Louvain - Institut de Recherches Economiques et Sociales; IZA Institute of Labor Economics

Date Written: April 2005

Abstract

The design of the unemployment insurance system critically depends on the choice of the evaluation criterion. Indicators of labor market performance, welfarist and non-welfarist criteria are compared. They often lead to very different conclusions. This paper also highlights that the distributional consequences of reforms should attract attention. A declining time profile of benefit payments dominates a scheme with a constant replacement ratio. According to welfarist and non-welfarist criteria, this profile should be skill-specific. For reasonable values of the monitoring cost, relating this profile to job-search effort produces positive but limited effects. Analytical and simulation results show that the design of the UI system is affected by the presence of active programs.

Keywords: Unemployment insurance, sanctions, policy complementarities, wage bargaining, equilibrium unemployment, equilibrium search

JEL Classification: J65

Suggested Citation

Van der Linden, Bruno, Unemployment Benefit Profile, Monitoring and Active Labor Market Policies: The Role of Normative Criteria (April 2005). Available at SSRN: https://ssrn.com/abstract=706828

Bruno Van der Linden (Contact Author)

Université Catholique de Louvain - Institut de Recherches Economiques et Sociales ( email )

3, Place Montesquieu
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://perso.uclouvain.be/bruno.vanderlinden/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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