The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Unemployment Insurance

  • Patricia M. Anderson
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2844

Abstract

Unemployment insurance (UI) is a social insurance programme in which compensation is paid to unemployed workers. Much of the research on UI has focused on the inherent disincentives. For example, higher benefits have been found to increase unemployment durations, with little clear positive impact on the quality of new jobs. Additionally, financing UI through payroll taxes that are not completely experience-rated provides an incentive for firms to lay off workers. Thus, while UI is an important safety net for unemployed workers, it may also increase unemployment overall.

Keywords

Adjustment costs Consumption smoothing Labour demand Labour supply Layoffs Reservation wage Search models of unemployment Tax incidence Unemployment Unemployment insurance 

JEL Classification

J6 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Patricia M. Anderson
    • 1
  1. 1.