Unemployment Insurance Schemes, Liquidity Constraints and Re-employment: A Three Country Comparison

Abstract

We examine how unemployment schemes and liquidity constraints affect re-employment probabilities trying to assess whether these schemes, through employment services and search requirements, can offset the perverse effect of benefits on unemployment duration. Similarly, given that liquidity constraints and financial pressure also affect reservation wage and search effort, we analyze whether better economic conditions of individuals increase duration. We perform a survival analysis on Finland, Italy and Poland and we find that unemployment insurance schemes have a mixed effect: initially they give incentives to increase search effort but with time they simply reduce liquidity constraints and thus increase duration. We also find that individuals’ liquidity constraints reduce unemployment duration in Italy and Poland but not Finland, suggesting that this aspect is less important in countries with a more developed welfare system

Social policies and intergenerational support in Italy and South Korea

“…Workers in low-paid, temporary and non-regular jobs, as well as the selfemployed, are less protected against unemployment and poverty, despite being disproportionately more exposed to both. In 2012-2013, the dates to which the data used in this article refer, unemployment benefits in both countries were of short duration, and eligibility criteria required recipients to have made contributions to the system for a period of one and a half to two years preceding unemployment, systematically excluding the longterm unemployed and informal sector workers (Corsini, 2012;Hwang & Lee, 2012). Despite recent labour market reforms, Italy and Korea continue to have unemployment benefits for poorer households that are among the lowest in the OECD (2017a).…”

The Canadian Unemployment Insurance Generosity: Reflections From A Comparative Analysis

“…The first type -A, is that of a single person without children, while the second type -B, refers to a married couple with two earners and two children. In a paper which examines this aspect, Corsini (2012) studies the determinants of the duration of unemployment. In particular, he takes a comparative approach, analyzing three different countries (Italy, Finland, and Poland).…”

How unemployment benefits affect individuals of different wealth classes

“…Preliminarily, we perform estimations considering that the baseline hazard function and the effect of benefits on duration are the same for the whole population; then we specify Cox-regression models where these two factors are specific to groups defined on the basis of their wealth class and on the degree of their economic problems. This preliminary regression follows closely what was done by Corsini (2012): in fact, we allow for the effect of benefits (measured in hundreds of euros) on duration to be time-varying (adding another variable which is given by the interaction of UB and time) and we include directly some measures of wealth and financial stress within the regressors. In particular, the following variables are included: the amount paid for the mortgage (in hundreds of euros), taxes paid on wealth (in hundreds of euros and divided by the equivalized size of households) and a qualitative variable that represents, according to the individuals, whether the household is "having problems in making ends meet" [7].…”

“…Our investigation focuses on the Italian case, using data on employment, income and wealth for the year 2007 from the EU-SILC survey (the same data that were used in the comparative analysis developed in Corsini, 2012). We perform survival analyses of newly unemployed workers (where the non-survival condition is actually finding a job) and we use Cox hazard models to estimate the determinants of unemployment duration, trying to disentangle the role of unemployment schemes and household wealth and also searching for the presence of interactions between benefits and wealth and financial conditions.…”