When free choice turns into a pitfall: conditional social protection for immigrants in voluntary unemployment insurance systems

Abstract

Unemployment insurance systems are designed to provide income security for those who drop out of work temporarily. This form of social protection is particularly relevant for foreign-born workers who are, on average, more likely to become unemployed during layoffs. The article explores how the social protection of immigrants differs in cases where payments are tied to voluntary rather than mandatory contributions. This is done by focusing on a recent welfare reform in Sweden which led to both a sharp increase in costs and a decline in benefit generosity overnight. It is argued that migrants lost their social protection at a disproportionate rate over the course of the reform. Both their status on the labour market and position as newcomers to the norms and rules of society are expected to impede on their decision to obtain or prolong insurance membership, leading to a decline in eligibility to income security. Difference-in-difference estimates with administrative data from all unemployment insurance funds show that the share of benefit recipients with earnings-related payments decreased at a higher rate among the foreign-born as expected, especially if they had arrived in the country only recently.

The impact of an unemployment insurance reform on incidence rates of hospitalisation due to alcohol-related disorders: a quasi-experimental study of heterogeneous effects across ethnic background, educational level, employment status, and sex in Sweden

“…The findings suggested that there was, in particular, a significant increase in incidence rates of hospitalisation due to alcohol-related disorders among unemployed individuals who were Swedish-born (regardless of whether they had Swedish-born or foreign-born parents), had low educational level, or were men. In terms of ethnic background, we initially hypothesised that the effect might be more pronounced among foreign-born individuals due to their overall weaker labour market attachment and, in particular, higher drop-out rate from the unemployment insurance funds [ 16 , 17 ]. This initially appeared to be the case for European foreign-born individuals whereas the opposite was found for the non-European foreign-born.…”

“…Such funds generally have a higher representation of individuals with lower educational attainment and occupations generating less income, as well as foreign-born. Indeed, studies show that those who had resided in Sweden for a short period of time and originated from countries that are geographically far from Sweden were considerably more likely to drop out of the unemployment insurance funds [ 17 ]. Additionally, incentives for accessing the income-based scheme are most likely weaker among individuals with low income [ 18 ].…”

“…A reduction in the generosity and coverage of unemployment insurance could potentially exaggerate stress related to the anticipation of job loss or experiences of unemployment, and thereby increase the use of alcohol as a way to cope with stress, which would then magnify the risk of hospitalisation due to alcohol-related disorders [cf. 3 , 17 ]. In this context, having a low educational level – and therefore potentially less socioeconomic resources – might reduce the individuals’ overall ability to manage their experiences of unemployment and exacerbate the negative impact on (alcohol-related) behaviours.…”

Weathering the storm together: Does unemployment insurance help couples avoid divorce?

“…Unemployment insurance was designed to alleviate the hardship of unemployment. Until the recent COVID-19 pandemic there was a trend towards reducing unemployment insurance generosity across the OECD ( Biegert, 2017 ; Gschwind, 2021 ; OECD, 2018 ). This was partly premised on findings that generous unemployment benefits extend unemployment duration ( Mortensen, 1976 ; for an overview see: Schmieder and Von Wachter, 2016 ).…”