Do Generous Welfare Benefits Lead To High Unemployment? Abstract
|
|
- Daniela Black
- 5 years ago
- Views:
Transcription
1 Do Generous Welfare Benefits Lead To High Unemployment? Abstract Keywords: welfare, disincentive, unemployment, benefits, welfare trap This paper discusses the conventional wisdom that unemployment benefits create a disincentive to work, the so-called welfare trap. It examines if higher benefit levels or longer benefit durations lead to higher unemployment rates. Surprisingly, it finds that the disincentive effect is negligible to non-existent. A wide range of different studies have found little or no disincentive effect. The orthodox economic view which states that workers will quit their jobs if they will receive more money from unemployment benefits has been found to be naive and unrealistic. Despite the large number of people who believe it to be true, it simply is not supported by evidence. The reason for this is that a job is not simply a way to make money, it is also part of an individual s identity. Unemployed workers suffer psychological damage from their lack of a job. They suffer from a higher rate of mental illness than those working and gain a boost in mental wellness when re-employed. The orthodox theory does not take into account the fact that many workers gain self-fulfilment from their work. There is no evidence that they suffer from a lack of work ethic either. The traditional theory ignores inconvenient facts such as the fact that many unemployed workers are not eligible for unemployment benefits or the full range of allowances. Many allowances apply only to families, whereas most of the unemployed are childless. These findings apply both in Ireland and abroad. In fact, a study found that 97% of those unemployed in Ireland in 2011 would improve their financial situation by getting a job. In most countries it is necessary to have worked a certain length of time before it is possible to receive benefits, this would actually cause benefits to have a positive rather than negative impact on participation in the labour force. Comparisons across countries find no link between generous benefits and high unemployment. In fact, the countries with the most generous benefits (Sweden, Denmark, Norway, and the Netherlands) have some of the lowest levels of unemployment. This paper concludes that, after taking the wealth of studies available on the topic, generous welfare benefits do not lead to high unemployment.
2 Do Generous Welfare Benefits Lead To High Unemployment? Conventional wisdom holds that if welfare rates are too high, people will simply stop working and go on the dole. In fact it has become a cliché to speak of people too lazy to work receiving unemployment benefits or single mothers having children solely to receive an allowance. It is seen as such an obvious statement that few question it. This has spread to economics where it is stated as fact that people will go on welfare if the rates are high enough. But when you get out of the political rhetoric and stereotypes, there is surprisingly little evidence to support such claims. Few studies have found a link between welfare rates and unemployment and those that have, found correlations much smaller than classical economics would have us believe. The classical or orthodox view is quite straight forward. If unemployment benefits are too high people will not have an incentive to get a job. It commonly stated that higher benefit duration and replacement rates tend to raise unemployment. (Siebert 1997:52) High unemployment is associated with... generous unemployment benefits that are allowed to run on indefinitely, combined with little or no pressure on the unemployed to obtain work. (Nickell 1997:72) Ljungqvist and Sargent too argue that unemployment insurance tends to increase the unemployment rate. (Ljungqvist & Sargent 1995:143) It has been argued that higher levels of state welfare benefits are associated with longer spell duration. Except for the dilemma of needing both to create appropriate incentives and protect the truly needy, the solution would be simple. Reduce benefits and duration will decline. (O Neill etc. 1987:248) These studies have been criticized for being based on a narrow set of studies that rely on data many decades old. (Howell & Azizgolu 2011:14) The classical theory has been derided as A naive model inappropriate for the assessment of the real world incentive effects of labour market policies. (Howell & Azizgolu 2011:23)(Atkinson & Micklewright 1991:1688) They have been described as very sensitive to rather strong assumptions. Generally they reveal what they assume, not what the data reveal. (Blundell 1994:35) The robustness of the data has been challenged, with claims that its assumptions are flawed. When previous work is adjusted to be more realistic, its effect ceased to be significantly different from zero. (Atkinson & Micklewright 1991:1711) The classical view is countered by the claim that unemployment insurance may actually increase the incentive to work. This is because unemployment insurance requires a person to have worked a certain amount of time before they can claim benefits. (Howell & Rehm 2009:68) This illustrates the fact that UI may have positive as well as negative effects on the transition from unemployment to employment. (Atkinson & Micklewright 1991:1699) (Nickell 1997:68) Even one of the most famous conservative economists Milton Friedman stated this point in his Nobel Lecture, when he said that unemployment insurance makes it more attractive to enter the labor force. (Friedman 1970:7)
3 A fact that is often overlooked is that only a fraction of those who are unemployed actually receive benefits, One study showed that only 30% of those classed as unemployed were receiving benefits in America. The figure was 26% for the UK. (Atkinson & Micklewright ) (Howell & Rehm 2009:64) This means that although welfare rates may appear to be high, in practice they may be much lower. (NESC 2011:119) When discussing the orthodox theory that high benefits cause high unemployment, Howell and Rehm state there is scant empirical support for such demand side effects... This should not be surprising, since, as noted below, in many countries, substantially less than half of the unemployed actually get benefits, and among those that do, most get income for limited durations that is far below previous earning levels. (Howell & Rehm 2009:63) Many theoretical studies ignore features about actual benefits systems, such as the fact those who voluntarily quit their job, often are not entitled to benefits. Similarly benefits are denied to those who are not available for work or who refuse suitable job offers. (Atkinson & Micklewright 1991:1721) (Howell & Azizgolu 2011:9) Similarly, although some benefits may be generous, many claimants may not qualify for it. While there is a lot of commentary on the benefits families receive for each child they have, they are not representative of the unemployed as a whole. In fact, 80% of people on the live register in Ireland do not have any children, while 56% of them are single. (NESC 2011:119) This leads the NESC to conclude that the degree of attention given to the potential disincentive effects of social welfare on large families in the 1980s would be quite disproportionate today. (NESC 2011:120) Similarly while rent supplement is often seen as having a large disincentive effect, only 11% of those receiving unemployment were receiving rent supplement. (NESC 2011:123) They challenge the conventional belief that higher benefits lead to longer duration spells. In their review of the literature, they find that most estimation calculate a very small effect. Most studies estimate that 10% rise in the replacement rate would only reduce the average unemployment duration by one week. (Atkinson & Micklewright 1991:1711) They note that this sort of evidence has important implications for policy suggesting, in the case of the U.K., that income support for most of the long-term unemployed may be increased to a higher level without concern for incentives. (Atkinson & Micklewright 1991:1713) In fact the level of benefits has almost no effect on unemployment. Instead it is the maximum amount of time a claimant can draw benefits. It has been estimated a cut in the maximum length is twice as effective as a cut in benefit rates. Even still the effects are quite small. An increase in maximum benefit duration lengths of one week only increases average duration by between weeks. (1991:1717) After reviewing previous studies, they conclude that there is no strong evidence that benefits have much effect on inflows, and that the evidence suggests that benefits affect inflows into unemployment less than outflows. (1991:1715) Interestingly a rise in unemployment is usually caused by less people finding jobs rather than more people losing theirs. (Howell & Azizgolu 2011:5-6)
4 The correlation between the maximum allowable duration of benefits and average duration is extremely weak. (Howell & Rehm 2009:69) Examination of a study found that while there was a positive link between replacement rates and unemployment, the effect was slight to negligible. Increasing the replacement rate by 10% would increase unemployment by between 0.1 and 1.3 points. (Howell & Rehm 2009:70) Figure 2 shows no correlation between the change in benefit level and the change in unemployment. In response to the OECD claim that there is a lag of 5-10 or even years, figures 4 and 5 dispute this and show that there is no correlation. Other studies show little evidence of causality running in the orthodox direction, from benefits to unemployment. In some cases, the results clearly indicate that the predicted effect run from unemployment to benefit generosity. (Howell & Rehm 2009:79-80) A study of each individual OECD country over several decades found no correlation between its replacement rate and its unemployment level. (Howell & Rehm 2009:80) Figure 6, also shows there is little or no link between a country s replacement rate and its unemployment level. Long potential duration of benefits, also fails to explain high unemployment and in fact the correlation works in the opposite direction. (Howell & Rehm 2009:85) In 2001 the OECD introduced a new data measurement the NRR. This too is negatively correlated to unemployment in figure 7, but in the short and long run. In fact it is also positively correlated with employment-population ratios. Countries with increasingly generous replacement rates and benefits durations appear to be associated with increasing employment rates. (Howell & Rehm 2009:86-7) The recipiency rate is measure of how many of the unemployed actually receive benefits. It has been argued that the more generous or lax a welfare system is, the higher the rate of unemployment. However, data finds a strong negative correlation between it and unemployment and a strong positive correlation with overall employment. These results are not consistent with the orthodox prediction that such generosity substantially undermines employment incentives. (Howell & Rehm 2009:86) Figure 9 shows that increasing access to benefits by the unemployed, at least as measured by the OCED s recipiency rate, is not associated with increasing unemployment over the last two decades. (Howell & Rehm 2009:88) A fact about welfare that is ignored by orthodox theorists is that there is a stigma attached it. Many people refuse a hand out on principle, regardless of their financial situation. While this is often seen as a positive thing as it discourages people from going onto benefit rolls, it has been shown that it can have negative effects on unemployment as employers can hold biases against unemployed people and may be less willing to hire them. The unemployed themselves get more discouraged the higher the stigma levels are. (Contini & Richiardi 2009:25-6) Surprisingly they find that welfare stigma is positively related to poverty and unemployment. (Contini & Richiardi 2009:8) It has been calculated that the replacement rate in Ireland in 2007 was 60%. (Callan etc 2011:8) About three-quarters of the recipients of Jobseeker s payments face a replacement
5 rate of less than 60 per cent and over half face a replacement rate of 50 per cent. At the other end of the scale, just over 3 per cent face a replacement rate of more than 100% (i.e., would receive more net income when unemployed than when in work). (Callan etc 2011:11-2) In other words, 97% of the unemployed would increase their income by getting a job. This completely contradicts the common notion that people receive more money with unemployment benefits that they would by working. The authors note that there often claims made that there is a weak financial incentive to move from unemployment into employment, and selective examples have been used to support this argument. We showed how such examples can be misleading, failing to take into account the range of factors affecting both benefit entitlements and potential earnings in work. (Callan etc 2011:17)In an Irish context, Layte and Callan did find a link between the replacement rate and the rate of people leaving welfare, though it was extremely small at They admit that the disincentive effect they found is very small in comparison to those found in other national contexts. (Layte & Callan 2001:125) They conclude that: it is interesting that most media, government and academic attention given to the question of disincentive effects is directed at the more disadvantaged portion of the unemployed who tend to receive means tested benefits and who show no sign of disincentive behaviour in this data. (Layte & Callan 2001:125) In 1987 the General Accounting Office (the agency responsible for auditing government spending in America), issued a report which examined over 100 separate studies on welfare since (GAO 1987:11) It concluded that research does not clearly support the contention that welfare creates a disincentive to work. (GAO 1987:24) O Neill, Bassis and Wolf state that The common notion that welfare typically becomes a state of dependency is not supported by these statistics. (O Neill, Bassis & Wolf 1987:244) The size of the disincentive effects that have been established in empirical research for replacement rates is quite modest and suggests that only a quite large reduction in social welfare, with major social consequences, would make a significant contribution to reducing high unemployment. (NESC 2011:127) They dismiss the idea that people quit working in order to receive unemployment benefits as in both the UK and the USA people who quit their jobs are a minority of the unemployed. (Atkinson & Micklewright 1991:1715) It has to be concluded that across a wide range of studies the effect of replacement rates on return to work probabilities has been found to be quite small... Given the results above, it is difficult to believe that entry into unemployment for prime age men could be significantly affected by replacement rates. A study found no significant effect of benefit income on the length of unemployment spells. (Blundell 1994:33) Most benefit systems offer income replacement at levels well below the average income, so none but the lowest wage workers receive anything close to their previous earnings level. In addition, eligibility rules exclude many of the unemployed in most countries. (Howell & Rehm 2009:63) They argue that strict tightening of unemployment can lead to workers accepting lower paid work, or jobs that do not utilise their talents. This leads to a less efficient economy in the
6 long run. (Howell & Azizgolu 2011:13) Higher benefits can insure that workers such longer and find a job they are more suited to, rather than accepting the first offer. This can increase labour productivity. (NESC 2011:129) Respondents are using the resources provided by benefits for more effective job search and thus a better more stable job. (Layte & Callan 2001) Financial considerations are not the only reasons why people work. Many people at work value the social contract their job brings while many unemployed experience isolation and a lack of structure to their lives... Positive well being effects are associated with being in work, while strong ill-effects unambiguously attend being unemployed. (NESC 2011:126) People are often defined by their job, so that unemployment robs them of part of their social and personal identity. (Jackson 1995:119) Employment offers the best prospects for meaningful activity which individuals find inherently satisfying: without it most of us feel deprived. (Bryson 1994:123) Surveys show that most people do not see a job solely as a means of making money and would work even if they did not need the money. For them financial incentives are irrelevant. (Howell & Azizgolu 2011:11) (Bryson 1994:126) The evidence overwhelmingly shows that in the real world holding a job is typically highly valued independently of the income it generates, and if this is so, changes in the UI generosity may have nothing to do with changes in the disutility to work. (Howell & Azizgolu 2011:9) Classical theory states that the unemployed should have an increase in life satisfaction as they have more lesure time and are free from the stress of work. Howver, this is contradicted by a wide field of studies which demonstrate that unemployment causes a lack of self-esteem and feelings of helplessness. (Carroll 2007:288-9) Classical theory ignores the fact that not working is breaking a social norm, which causes a loss of reputation. (Carroll 2007:289) A cross section of 52 seperate studies showed that the unemployed suffered from poorer mental health, lower life satisfaction, lower martial or family satisfaction and poorer physical health. (Kinicki 2005:61) A survey of 15 studies shows that reemployment caused significant improvements in mental health, life satisfaction and physical health. (Kinicki 2005:61) (Carroll 2007:293) While there are questions regarding correlation and casaulity, there is a large amount of consistenty among studies finding links between unemployment and lower well being. (Kinicki 2005:67) Because individuals with high workrole centrality find the work role as providing meaning and fulfilment, the absence of work for those individuals has been proposed by many authors to at lead to lower psychological and psychical well being. (Kinicki 2005:56) Interestingly, it found that the actual level of benefits has no effect on mental health. This implies it is the absence of work rather than the loss of income that is most damaging. (Kinicki 2005:67) An unemployed man would have to be compensated with 42,100 Australian dollars (almost 33,500 euro) in order to bring his life satisfaction to the same level of an employed man. This difference is even larger for women who would have to receive 86,300 Australian dollars (68,500 euro). (Carroll 2007:298) Similar findings regards life satisfaction and income compensation have
7 been found in studies in other countries, with unemployed men in the UK particularly low levels of life satisfaction 69% lower than those of the unemployed. (Carroll 2007:300) Despite the conventional wisdom, studies have found that the unemployed do not suffer from a lack of work ethic. No evidence was found supporting the idea that it is lack of motivation or work ethic that prevented the unemployed from getting a job. (Jackson 1994:114) In most cases the probability of accepting a job offer is close to unity. (Atkinson & Micklewright 1991:1712) While economists focus on the large disincentives having children are supposed to have on working. However surveys show that it is the unemployed that have children that are the most motivated to get a job. (Jackson 1994:112) After drawing together different studies, viewpoints and opinions it is clear that the disincentive effect that is supposed to affect the unemployed is greatly exaggerated. The conventional wisdom is simply not supported by facts. In fact most available data contradicts it. The orthodox model fails to give an accurate description of the real world, instead relying on overly simplistic assumptions. It ignores features of welfare systems that prevent people from receiving assistant, such as means tests and work tests. It ignores the stigma associated with receiving hand-outs and the psychological damage unemployment does. It glosses over the non financial benefits people gain from work. Contrary the orthodox opinion, generous welfare benefits do not lead to higher unemployment, longer durations of unemployment or a disincentive to work. Bibliography Atkinson, A. and Micklewright, J., (1991) Unemployment Compensations and Labor Market Transitions: A Critical Review, Journal of Economic Literature, Vol. 29, No.3, Blundell, R., Work Incentives and Labour Supply in the UK, in Is It Worth Working, (1994), Bryson, A., & McKay, S. (eds), 19-38, Policy Studies Institute, London Bryson, A., Is It Worth Working? in Is It Worth Working, (1994), Bryson, A., & McKay, S. (eds), , Policy Studies Institute, London Callan, T., (ed) Crilly, N., Keane, C., Walsh, J., (2011) Tax, Welfare and Work Incentives, Budget Perspectives 2012, ESRI, Dublin Carroll, N., (2007) Unemployment and Psychological Well-Being in The Economic Record, Vol.83, No.262, Contini, D. and Richiardi, M., (2009) Reconsidering the Effects of Stigma on Unemployment Friedman, M., (1970), Nobel Lecture: Inflation and Unemployment
8 Howell, D. And Azizoglu, B., (2011) Unemployment Benefits and Work Incentives: The US Labor Market in the Great Recession. Political Economy Research Institute, Working Paper No.257 Howell, D. and Rehm, M., (2009) Unemployment Compensation and High European Unemployment: A Reassessment With New Benefit Indicators, Oxford Review of Economic Policy, Vol.25, No.1, General Accounting Office, Welfare: Issues to Consider in Assessing Proposals for Reform, February 1987, Washington Jackson, P., Influences on Commitment to Employment and Commitment to Work, in Is It Worth Working, (1994), Bryson, A., & McKay, S. (eds), , Policy Studies Institute, London Kinicki, A., McKee-Ryan, F., Song, Z., Wanberg, C., (2005) Psychological and Physical Well- Being During Unemployment: A Meta-Analytic Study, in Journal of Applied Psychology, Vol. 90, No.1, Layate, R. And Callan,T.,(2001) Unemployment, Welfare Benefits and the Financial Incentive to Work, in Economic and Social Review, Vol. 32, No.2, Ljungqvist, L. and Sargent, T., (1995) Welfare States and Unemployment, in Economic Theory, Vol. 6, Ljungqvist, L. and Sargent,T., (1998) European Unemployment Problem, in journal of Political Economy, Vol. 106, No.3, National Economic & Social Council, Supports and Services for Unemployed Jobseekers: Challenges and Opportunities in a Time of Recession, No.123, August 2011 Nickell, S., (1997) Unemployment and Labor Market Rigidities: Europe versus North America, in Journal of Economic Perspectives, Vol. 11, No.3, O Neill, J., Bassi, L. and Wolf, D., (1987) Duration of Welfare Spells, in The Review of Economic and Statistics, Vol.69 No.2, Siebert, H., (1997) Labour Market Rigidities: At the Root of Unemployment in Europe, in Journal of Economic Perspectives, Vol.11, No.3, 37-54
9
10 (Howell & Rehm 2009:78) (Howell & Rehm 2009:79)
11 (Howell & Rehm 2009:85) (Howell & Rehm 2009:87)
12 (Howell & Rehm 2009:89) (Callan et al 2011:11)
EPI & CEPR Issue Brief
EPI & CEPR Issue Brief IB #205 ECONOMIC POLICY INSTITUTE & CENTER FOR ECONOMIC AND POLICY RESEARCH APRIL 14, 2005 FINDING THE BETTER FIT Receiving unemployment insurance increases likelihood of re-employment
More informationECONOMY IN THE LONG RUN. Chapter 6. Unemployment. October 23, Chapter 6: Unemployment. ECON204 (A01). Fall 2012
ECONOMY IN THE LONG RUN Chapter 6 Unemployment October 23, 2012 1 Topics in this Chapter Focus on the Long run unemployment rate Natural Rate of Unemployment contrast with cyclical behaviour of unemployment
More informationIntroduction to De Economist Special Issue Retirement and Employment Opportunities for Older Workers
De Economist (2013) 161:219 223 DOI 10.1007/s10645-013-9214-4 Introduction to De Economist Special Issue Retirement and Employment Opportunities for Older Workers Pierre Koning Received: 10 July 2013 /
More informationIn the first UK budget by a Conservative government for 18 years, 13 billion per annum
Employment and Support Allowance, the summer budget and less eligible disabled people Abstract In the first UK budget by a Conservative government for 18 years, 13 billion per annum savings in social security
More informationCIE Economics A-level
CIE Economics A-level Topic 4: The Macroeconomy d) Employment and unemployment Notes Size and components of labour force The working age population is between the ages of 18 and 65 who are actively looking
More informationDr Barrett's comments on our recent report on Poverty and the Social
The Economic and Social Review, Vol. 20, Mo. 4, July, 1989, pp. 361-368 Measuring Poverty in Ireland: A Reply T. CALLAN, D.F. HANNAN, B. NOLAN and B.J. WHELAN The Economic and Social Research Institute,
More informationCHAPTER 13. Duration of Spell (in months) Exit Rate
CHAPTER 13 13-1. Suppose there are 25,000 unemployed persons in the economy. You are given the following data about the length of unemployment spells: Duration of Spell (in months) Exit Rate 1 0.60 2 0.20
More informationV. MAKING WORK PAY. The economic situation of persons with low skills
V. MAKING WORK PAY There has recently been increased interest in policies that subsidise work at low pay in order to make work pay. 1 Such policies operate either by reducing employers cost of employing
More informationAN ANNOTATED BIBLIOGRAPHY OF RECENT RESEARCH ON LABOUR RELATIONS POLICY, UNIONIZATION, AND CANADA-U.S. LABOUR MARKET PERFORMANCE
Sran 140 AN ANNOTATED BIBLIOGRAPHY OF RECENT RESEARCH ON LABOUR RELATIONS POLICY, UNIONIZATION, AND CANADA-U.S. LABOUR MARKET PERFORMANCE Garry Sran Ph.D. Student, Department of Economics, York University,
More informationWorkforce participation of mature aged women
Workforce participation of mature aged women Geoff Gilfillan Senior Research Economist Productivity Commission Productivity Commission Topics Trends in labour force participation Potential labour supply
More informationAQA Economics A-level
AQA Economics A-level Macroeconomics Topic 3: Economic Performance 3.2 Employment and unemployment Notes Measures of unemployment It is usually difficult to accurately measure unemployment. Some of those
More informationMETHODOLOGICAL ISSUES IN POVERTY RESEARCH
METHODOLOGICAL ISSUES IN POVERTY RESEARCH IMPACT OF CHOICE OF EQUIVALENCE SCALE ON INCOME INEQUALITY AND ON POVERTY MEASURES* Ödön ÉLTETÕ Éva HAVASI Review of Sociology Vol. 8 (2002) 2, 137 148 Central
More informationTopic 2.3b - Life-Cycle Labour Supply. Professor H.J. Schuetze Economics 371
Topic 2.3b - Life-Cycle Labour Supply Professor H.J. Schuetze Economics 371 Life-cycle Labour Supply The simple static labour supply model discussed so far has a number of short-comings For example, The
More informationThe Crisis, Welfare State Retrenchment and Social Cohesion: Lessons from Social Science
The following three papers were presented at a symposium on The Crisis, Welfare State Retrenchment and Social Cohesion: Lessons from Social Science which was held at Newman House on 30 March 2010 organised
More informationEC426-Public Economics. Class 2, Question1
EC426-Public Economics Class 2, Question1 In the US, the time that people can receive unemployment benefits is extended during recessions. Use the Baily formula to shed light on this particular design
More informationAre Protective Labor Market Institutions Really at the Root of Unemployment? A Critical Perspective on the Statistical Evidence 1
July 14, 2006 Are Protective Labor Market Institutions Really at the Root of Unemployment? A Critical Perspective on the Statistical Evidence 1 David R. Howell, Dean Baker, Andrew Glyn and John Schmitt
More informationThe Martikainen Employment Model
The Martikainen Employment Model Full employment in Finland Full employment is possible if, unlike at present, employers can also employ people at significantly lower labour costs. If this were so, the
More informationWe all need public supports and services that provide avenues to economic security.
Economic Security Investments in economic security ensure that people can survive difficult financial times and take steps to improve their quality of life. Families succeed when parents are secure in
More informationTackling the jobs crisis: An OECD perspective
Organisation for Economic Co-operation and Development OECD High-Level Parliamentary Seminar 18 February 2010 Tackling the jobs crisis: An OECD perspective Stefano Scarpetta Head of the Employment Analysis
More informationWORKINGPAPER SERIES. Unemployment Compensation and High European Unemployment: A Reassessment with New Benefit Indicators
Unemployment Compensation and High European Unemployment: A Reassessment with New Benefit Indicators David R. Howell and Miriam Rehm April 2009 RESEARCH INSTITUTE POLITICAL ECONOMY Gordon Hall 418 North
More informationTitle Registration for a Systematic Review: Reducing Unemployment Benefit Duration to Increase Job Finding Rates: A Systematic Review
Title Registration for a Systematic Review: Reducing Unemployment Benefit Duration to Increase Job Finding Rates: A Systematic Review Trine Filges, Anders Bruun Jonassen and Anne-Marie Klint Jørgensen
More informationTopic 2.3b - Life-Cycle Labour Supply. Professor H.J. Schuetze Economics 371
Topic 2.3b - Life-Cycle Labour Supply Professor H.J. Schuetze Economics 371 Life-cycle Labour Supply The simple static labour supply model discussed so far has a number of short-comings For example, The
More informationWorld Bank Employment Policy Primer
Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized World Bank Employment Policy Primer February 2004 No. 3 COMPARING UNEMPLOYMENT INSURANCE
More informationBalancing Activation and Protection Learning from Active Social Policies in the European Union and the United States
uman evelopment conomics, urope and Central Asia Region Balancing Activation and Protection Learning from Active Social Policies in the uropean Union and the United States Arup Banerji Sofia, Bulgaria
More informationLECTURE 7: UNEMPLOYMENT BENEFIT AND ALMPS. Instructor: Prof. Wong Hung
LECTURE 7: UNEMPLOYMENT BENEFIT AND ALMPS Instructor: Prof. Wong Hung Definination of Unemployment According to the criteria of the International Labour Organisation (ILO), the unemployed comprise all
More informationUnemployment and Inflation
Unemployment and Inflation By A. V. Vedpuriswar October 15, 2016 Inflation This refers to the phenomenon by which the price level rises and money loses value. There are two kinds of inflation: Demand pull
More informationTim Callan, Niamh Crilly, Claire Keane, John R. Walsh and Áine Ní Shúilleabháin
Tax, Welfare and Work Incentives 1 Tax, Welfare and Work Incentives 1 Tim Callan, Niamh Crilly, Claire Keane, John R. Walsh and Áine Ní Shúilleabháin INTRODUCTION Over the last decade Irish tax policy
More informationDid the Social Assistance Take-up Rate Change After EI Reform for Job Separators?
Did the Social Assistance Take-up Rate Change After EI for Job Separators? HRDC November 2001 Executive Summary Changes under EI reform, including changes to eligibility and length of entitlement, raise
More information9. IMPACT OF INCREASING THE MINIMUM WAGE
9. IMPACT OF INCREASING THE MINIMUM WAGE [9.1] The ACTU has discussed a number of academic studies on the minimum wage in its submission which require a reply from employers. In dealing with this material,
More informationAn Empirical Note on the Relationship between Unemployment and Risk- Aversion
An Empirical Note on the Relationship between Unemployment and Risk- Aversion Luis Diaz-Serrano and Donal O Neill National University of Ireland Maynooth, Department of Economics Abstract In this paper
More informationThe welfare dependence in the Czech Republic
The welfare dependence in the Czech Republic Martin Guzi TPAVF Prague, 2014 International evidence Mulligan (2012) explains that recently expanded welfare programs in the USA provide strong disincentives
More informationFoundation for Fiscal Studies Dublin, 25 May OECD Economic Outlook On the Road to Durable Recovery? Patrick Lenain OECD
Foundation for Fiscal Studies Dublin, 25 May 2011 OECD Economic Outlook 2011-12 On the Road to Durable Recovery? Patrick Lenain OECD A Durable Recovery in the OECD? Key features of OECD projections for
More informationThe Bottom Line in a Basic Income Experiment
BASIC INCOME STUDIES An International Journal of Basic Income Research Vol. 1, Issue 2 COMMENT December 2006 Debate: Toward a Basic Income Experiment? Guest editor: Loek Groot, University of Utrecht The
More informationChapter 26 Transmission Mechanisms of Monetary Policy: The Evidence
Chapter 26 Transmission Mechanisms of Monetary Policy: The Evidence Multiple Choice 1) Evidence that examines whether one variable has an effect on another by simply looking directly at the relationship
More informationThe Impact of Globalisation on Systems of Social Security
The Impact of Globalisation on Systems of Social Security prepared for the 9 th NISPAcee Annual Conference: Government, Market and the Civic Sector: The Search for a Productive Partnership (Working group
More informationUnemployment: Benefits, 2010
Austria Unemployment benefit: The benefit is 55% of net earnings and is paid for up to 20 weeks; may be extended to 30 weeks with at least 156 weeks of coverage in the last 5 years; 39 weeks if aged 40
More information: Monetary Economics and the European Union. Lecture 8. Instructor: Prof Robert Hill. The Costs and Benefits of Monetary Union II
320.326: Monetary Economics and the European Union Lecture 8 Instructor: Prof Robert Hill The Costs and Benefits of Monetary Union II De Grauwe Chapters 3, 4, 5 1 1. Countries in Trouble in the Eurozone
More informationDSD: Work Capability Assessment A Call for Evidence: Year 2 Independent Review October 2011
DSD: Work Capability Assessment A Call for Evidence: Year 2 Independent Review Law Centre 1. About Law Centre (NI) 1.1 Law Centre (NI) is a public interest law non-governmental organisation. We work to
More informationLOCALISING COUNCIL TAX SUPPORT: A BRIEFING NOTE ON LOCAL AUTHORITIES PLANS Sam Popper and Peter Kenway
LOCALISING COUNCIL TAX SUPPORT: A BRIEFING NOTE ON LOCAL AUTHORITIES PLANS Sam Popper and Peter Kenway SUMMARY As the most widely-claimed means-tested benefit, the replacement of council tax benefit with
More informationWelfare Targeting and Work Incentives
Welfare Targeting and Work Incentives Michael Savage, Tim Callan Claire Keane, Elish Kelly John R. Walsh BUDGET PERSPECTIVES 2015 PAPER 3 June 2014 Welfare Targeting and Work Incentives M. Savage, T.
More informationThe Combat Poverty Agency/ESRI Report on Poverty and the Social Welfare. Measuring Poverty in Ireland: An Assessment of Recent Studies
The Economic and Social Review, Vol. 20, No. 4, July, 1989, pp. 353-360 Measuring Poverty in Ireland: An Assessment of Recent Studies SEAN D. BARRETT Trinity College, Dublin Abstract: The economic debate
More informationWage Setting and Price Stability Gustav A. Horn
Wage Setting and Price Stability by Gustav A. Horn Duesseldorf March 2007 1 Executive Summary Wage Setting and Price Stability In the following paper the theoretical and the empirical background of the
More informationConditional convergence: how long is the long-run? Paul Ormerod. Volterra Consulting. April Abstract
Conditional convergence: how long is the long-run? Paul Ormerod Volterra Consulting April 2003 pormerod@volterra.co.uk Abstract Mainstream theories of economic growth predict that countries across the
More informationChapter 7. Employment protection
Chapter 7 Employment protection This chapter heavily borrows from courses and slides by Tito Boeri, Professor of Economics at Bocconi University, Milan, Italy Protecting jobs Losing a job is always a bad
More informationEuro-Productivity and Euro-Jobs. Which Institutions Really Matter? since the 1960s: Gayle Allard (Instituto de Empresa, Madrid)
Euro-Productivity and Euro-Jobs since the 1960s: Which Institutions Really Matter? Gayle Allard (Instituto de Empresa, Madrid) and Peter Lindert (UC-Davis and NBER) Two police cases that should be one:!
More informationThe disconnected population in Tennessee
The disconnected population in Tennessee Donald Bruce, William Hamblen, and Xiaowen Liu Donald Bruce is Douglas and Brenda Horne Professor at the Center for Business and Economic Research, and Graduate
More informationAggregate demand &long-run unemployment L. Ball 1999
Aggregate demand &long-run unemployment L. Ball 1999 Standard theory: equilibrium unemployment depends on labour market rigidities and institutional variables Monetary policy should focus on nominal stability,
More informationInternational Money and Banking: 6. Problems with Monetarism
International Money and Banking: 6. Problems with Monetarism Karl Whelan School of Economics, UCD Spring 2018 Karl Whelan (UCD) Money and Inflation Spring 2018 1 / 30 The Basic Elements of Monetarism Last
More informationThe impact of monitoring and sanctioning on unemployment exit and job-finding rates
Duncan McVicar Queen s University Belfast, UK The impact of monitoring and sanctioning on unemployment exit and Job search monitoring and benefit sanctions generally reduce unemployment duration and boost
More informationICELAND. 1. Overview of the system
ICELAND 1. Overview of the system Iceland has an insurance-based unemployment benefit. Financial assistance is available for those without other resources. There is a housing benefit for those with low
More informationECONOMIC COMMENTARY. Unemployment after the Recession: A New Natural Rate? Murat Tasci and Saeed Zaman
ECONOMIC COMMENTARY Number 0-11 September 8, 0 Unemployment after the Recession: A New Natural Rate? Murat Tasci and Saeed Zaman The past recession has hit the labor market especially hard, and economists
More informationAdvanced Macroeconomics
PART IV. STRUCTURAL UNEMPLOYMENT 6. SOME FACTS AND INTRODUCTORY THEORY ABOUT UNEMPLOYMENT In the growth models adjustments in the real wage ensured that labour demand was always equal to labour supply,
More informationMacroeconomics. Part Two: Unemployment and Money. Dr. Ali Moghaddasi Kelishomi. Warwick Economics Summer School 2016
Macroeconomics Part Two: Unemployment and Money Dr. Ali Moghaddasi Kelishomi Warwick Economics Summer School 2016 1 1. THE LONG RUN 2. Production, prices, and the distribution of income What determines
More informationSubmission to the Senate Education, Employment and Workplace Relations References Committee Inquiry into the Adequacy of the Allowance Payment System
Submission to the Senate Education, Employment and Workplace Relations References Committee Inquiry into the Adequacy of the Allowance Payment System for Jobseekers and Others AUGUST 2012 Business Council
More informationPOVERTY AND WELFARE: THE GAO REPORT
POVERTY AND WELFARE: THE GAO REPORT From time to time we have reported on the state of the social science research on poverty, race, and welfare. The Government Accounting Office recently issued a report
More informationInvesting the effects of Tobin s q ratio and operating growth rate on the level of investment in the chemical industry
Investing the effects of Tobin s q ratio and operating growth rate on the level of investment in the chemical industry Maryam Eydizadeh Department of Management, Central Tehran Branch, Islamic Azad University,
More informationANNEX 3. The ins and outs of the Baltic unemployment rates
ANNEX 3. The ins and outs of the Baltic unemployment rates Introduction 3 The unemployment rate in the Baltic States is volatile. During the last recession the trough-to-peak increase in the unemployment
More informationPOLICY BRIEFING. ! Institute for Fiscal Studies 2015 Green Budget
Institute for Fiscal Studies 2015 Green Budget 1 March 2015 Mark Upton, LGIU Associate Summary This briefing is a summary of the key relevant themes in the Institute of Fiscal Studies 2015 Green Budget
More informationSUBMISSION TO THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION REGARDING THE ACTU LIVING WAGE APPLICATIONS. by Leigh Harkness
SUBMISSION TO THE AUSTRALIAN INDUSTRIAL RELATIONS COMMISSION REGARDING THE ACTU LIVING WAGE APPLICATIONS 1. INTRODUCTION 1.1 Economic rational 1.1.1 This submission contends that wages generally, and award
More informationAge, Demographics and Employment
Key Facts Age, Demographics and Employment This document summarises key facts about demographic change, age, employment, training, retirement, pensions and savings. 1 Demographic change The population
More informationSources. * (Economist) mid 1998 **1992, Manufacturing. (US Bur. Lab. Stats, Washington DC) Total: 1990 (US Bur. Lab. Stats, Washington DC);
Some notes on the supply side- unemployment, productivity and growth The modern macroeconomic model implies that the economy is converging on its natural rate at some speed determined by for example overlapping
More informationTax Rates and Economic Growth
Jane G. Gravelle Senior Specialist in Economic Policy Donald J. Marples Section Research Manager December 5, 2011 CRS Report for Congress Prepared for Members and Committees of Congress Congressional Research
More informationNational Programme for Ageing Workers in Finland. Peer review: Sweden
National Programme for Ageing Workers in Finland Peer review: Sweden Paper presented at the peer review in Helsinki 2000-10-12--13 by Arne Svensson Professional Management Arne & Barbro Svensson AB, Illervägen
More informationEurasian Economic Union. Advantages and disadvantages
Eurasian Economic Union. Advantages and disadvantages Nurdaulet Abilov ISE, KBTU 8 th June 2014 Everyone likes white beautiful horses but no one wants to become one. - St. Augustine The underlying logic
More informationIs the Western Welfare State Still Sustainable?
Is the Western Welfare State Still Sustainable? James Heckman University of Chicago and University College Dublin ILO Institute March 23, 2007 1 / 36 Half a century ago, the free-market economist Friedrich
More informationTopic 2.3a - Social Programs. Professor H.J. Schuetze Economics 370. Alternative Income Maintenance Schemes
opic 2.3a - Social Programs Professor H.J. Schuetze Economics 370 Alternative Income Maintenance Schemes Governments in Canada spend over 10 percent of GDP on income maintenance schemes he effectiveness
More informationRe: Inquiry into the Social Services Legislation Amendment (Youth Employment and Other Measures) Bill 2015 ( the Bill )
10 June 2015 Committee Secretary Senate Standing Committee on Community Affairs PO Box 6100 Parliament House Canberra ACT 2600 Dear Committee Secretariat, Re: Inquiry into the Social Services Legislation
More informationLabor Market Protections and Unemployment: Does the IMF Have a Case? Dean Baker and John Schmitt 1. November 3, 2003
cepr Center for Economic and Policy Research Briefing Paper Labor Market Protections and Unemployment: Does the IMF Have a Case? Dean Baker and John Schmitt 1 November 3, 2003 CENTER FOR ECONOMIC AND POLICY
More informationWomen in Work How can policy makers encourage female labour force participation?
Women in Work How can policy makers encourage female labour force participation? Ensuring that women can partake in the workforce on equal terms with men is important for gender equality and poverty reduction.
More informationThe Changing Effects of Social Protection on Poverty
The Changing Effects of Social Protection on Poverty Arbeitspapier Nr. 22 Brian Nolan, Richard Hauser, Jean-Paul Zoyem with the collaboration of Beate Hock, Mohammad Azhar Hussain, Sheila Jacobs, Charlotte
More informationBasic Income as a policy option: Can it add up?
Basic Income as a policy option: Can it add up? Poverty in Europe and how to fight it Sapienza Università di Roma,26 May 2017 Herwig Immervoll Jobs and Income, OECD Herwig.immervoll@oecd.org Concerns about
More informationDEMAND FOR MONEY. Ch. 9 (Ch.19 in the text) ECON248: Money and Banking Ch.9 Dr. Mohammed Alwosabi
Ch. 9 (Ch.19 in the text) DEMAND FOR MONEY Individuals allocate their wealth between different kinds of assets such as a building, income earning securities, a checking account, and cash. Money is what
More informationDo high interest rates stem capital outflows?
Economics Letters 67 (2000) 187 192 www.elsevier.com/ locate/ econbase q Do high interest rates stem capital outflows? Michael R. Pakko* Senior Economist, Federal Reserve Bank of St. Louis, 411 Locust
More informationLabour Market Policies in Selected EU Member States: A Comparative and Impact Analysis
The omanian Economic Journal 151 Labour Market Policies in Selected EU Member States: A Comparative and Impact Analysis Liana Son 1 Graţiela Georgiana Carica 2 The purpose of the paper is to analyse the
More informationLabor Reform in a Dysfunctional Labor Market. Pedro Portugal (Banco de Portugal and NOVA School of Business and Economics)
Labor Reform in a Dysfunctional Labor Market Pedro Portugal (Banco de Portugal and NOVA School of Business and Economics) Olivier Portugal is in serious trouble. Productivity growth is anemic. Growth is
More informationKEY THINGS TO KNOW ABOUT UNEMPLOYMENT INSURANCE by Hannah Shaw and Chad Stone
820 First Street NE, Suite 510 Washington, DC 20002 Tel: 202-408-1080 Fax: 202-408-1056 center@cbpp.org www.cbpp.org Updated December 20, 2011 KEY THINGS TO KNOW ABOUT UNEMPLOYMENT INSURANCE by Hannah
More informationUnemployment Benefits, Unemployment Duration, and Post-Unemployment Jobs: A Regression Discontinuity Approach
Unemployment Benefits, Unemployment Duration, and Post-Unemployment Jobs: A Regression Discontinuity Approach By Rafael Lalive* Structural unemployment appears to be strongly correlated with the potential
More informationThe Nordic labour markets and the concept of flexicurity
The Nordic labour markets and the concept of flexicurity By Hans Jensen, President of the Danish Confederation of Trade Unions (LO), and Jørn Neergaard Larsen, Director General of the Confederation of
More informationThe Minimum Wage Ain t What It Used to Be
http://economix.blogs.nytimes.com/2013/12/09/the-minimum-wage-aint-what-it-used-to-be DECEMBER 9, 2013, 11:00 AM The Minimum Wage Ain t What It Used to Be By DAVID NEUMARK David Neumarkis professor of
More informationWHY THE EUROPEAN COMMISSION IS WRONG: THE CASE OF SPAIN. By Vicente Navarro 19/08/2013. The Vice President of the European Commission, Olli Rehn, in
WHY THE EUROPEAN COMMISSION IS WRONG: THE CASE OF SPAIN By Vicente Navarro 19/08/2013 The Vice President of the European Commission, Olli Rehn, in charge of Economic and Monetary Affairs is becoming the
More informationInflation can have two principal kinds of redistributive effects. Even when
Economic and Social Review VoL 9 No. 2 Expenditure Patterns and the Welfare Effects of Inflation: Estimates of a "True" Cost-of-Living Index* IAN IRVINE University of Western Ontario COLM MCCARTHY Central
More informationAustralian inflation & unemployment: an overview
Australian inflation & unemployment: an overview Three main measures of inflation in Australia 1. 2. 3. The consumer price index - or CPI. This the main measure used in media and business transactions.
More informationOpen Seminar Tackling Child Poverty: Lessons from the UK and New Frontiers in Japan Doshisha University Kyoto January
Open Seminar Tackling Child Poverty: Lessons from the UK and New Frontiers in Japan Doshisha University Kyoto January 9 2012 Until 1945 financial needs of children not recognised by the state poor law,
More informationThe Economic Effects of the Estate Tax
The Economic Effects of the Estate Tax Testimony of David S. Logan Economist, Tax Foundation Hearing before the Pennsylvania House Finance Committee October 17, 2011 I am David Logan, an economist with
More informationBoosting Jobs and Incomes
Meeting of G8 Employment and Labour Ministers, Moscow, 9-10 October 2006 Boosting Jobs and Incomes Policy lessons from the Reassessment of the OECD Jobs Strategy (Background paper prepared by the OECD
More informationBeyond stereotypes. Myths and facts about people of working age who receive social security
Beyond stereotypes Myths and facts about people of working age who receive social security ACOSS Paper 175 May 2011 CONTACT Australian Council of Social Service Locked Bag 4777, Strawberry Hills, NSW,
More informationWHO S LEFT TO HIRE? WORKFORCE AND UNEMPLOYMENT ANALYSIS PREPARED BY BENJAMIN FRIEDMAN JANUARY 23, 2019
JANUARY 23, 2019 WHO S LEFT TO HIRE? WORKFORCE AND UNEMPLOYMENT ANALYSIS PREPARED BY BENJAMIN FRIEDMAN 13805 58TH STREET NORTH CLEARNWATER, FL, 33760 727-464-7332 Executive Summary: Pinellas County s unemployment
More informationPoverty and income inequality
Poverty and income inequality Jonathan Cribb Public Economics Lectures, Institute for Fiscal Studies 17 th December 2012 Overview The standard of living in the UK Income Inequality The UK income distribution
More informationUnemployment and Happiness
Unemployment and Happiness Fumio Ohtake Osaka University Are unemployed people unhappier than employed people? To answer this question, this paper presents an extensive review of previous overseas studies
More informationPension Challenges and Pension Reforms in OECD Countries
Pension Challenges and Pension Reforms in OECD Countries Peter Whiteford Social Policy Division, OECD http://www.oecd.org/els/social Email: Peter.Whiteford@oecd.org 1 Issues and Outline The challenges
More informationCZECH REPUBLIC Overview of the tax-benefit system
CZECH REPUBLIC 2004 1. Overview of the tax-benefit system Czech citizens are secured (protected) by three social security systems, i.e. by the social insurance, state social support and social assistance.
More informationDownloads from this web forum are for private, non-commercial use only. Consult the copyright and media usage guidelines on
Econ 3x3 www.econ3x3.org A web forum for accessible policy-relevant research and expert commentaries on unemployment and employment, income distribution and inclusive growth in South Africa Downloads from
More informationComment. John Kennan, University of Wisconsin and NBER
Comment John Kennan, University of Wisconsin and NBER The main theme of Robert Hall s paper is that cyclical fluctuations in unemployment are driven almost entirely by fluctuations in the jobfinding rate,
More information1. Human happiness is more affected by whether or not one has a job than by what kind of job it is.
RL382 *22'-2%6$1'%$'-2%6 $QRWHIRUGLVFXVVLRQ 5LFKDUG/D\DUG If unemployment is Europe s greatest problem, does it follow that almost any job is better than no job? And, if it does, what are the policy implications?
More informationWealth inequality: causes and consequences A project proposal
Wealth inequality: causes and consequences A project proposal The Institute for Public Policy Research (ippr) ippr is the UK s leading progressive think tank. Through our well-researched and clearly argued
More informationAct Concerning Stabilization of Employment of Older Persons
Act Concerning Stabilization of Employment of Older Persons Noboru Yamashita Associate Professor, Kyushu University 1. Significance of the Act Concerning Stabilization of Employment of Older Persons (1)
More informationEARLY RETIREMENT IN OECD COUNTRIES: THE ROLE OF SOCIAL SECURITY SYSTEMS
OECD Economic Studies No. 29, 1997/II EARLY RETIREMENT IN OECD COUNTRIES: THE ROLE OF SOCIAL SECURITY SYSTEMS Sveinbjörn Blöndal and Stefano Scarpetta TABLE OF CONTENTS The issue and key results... 8 Old-age
More informationThe Role of Taxes in Economic Development of Kosovo
The Role of Taxes in Economic Development of Kosovo Artan Nimani artannimani@gmail. com Kolegji Biznesi Gjakovë, Kosovë Abstract To achieve prosperity and political stability, national governments aimed
More informationStock Repurchases and the EPS Enhancement Fallacy
Financial Analysts Journal Volume 64 Number 4 28, CFA Institute Stock Repurchases and the EPS Enhancement Fallacy Jacob Oded and Allen Michel A common belief among practitioners and academics is that the
More informationLecture 4: Changes and Reforms in Social Security and Welfare Policies. Instructor: Dr. Wong Hung
Lecture 4: Changes and Reforms in Social Security and Welfare Policies Instructor: Dr. Wong Hung The Neo-classical ideology and New Right Governments State provision of welfare service are inherently wasteful
More information