nep-ias New Economics Papers
on Insurance Economics
Issue of 2008‒06‒21
three papers chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. The Effect of Sanctions on the Job Finding Rate: Evidence from Denmark By Michael Svarer
  2. The role of workfare in striking a balance between incentives and insurance in the labour market By Torben M. Andersen; Michael Svarer
  3. "A reappraisal of the incidence of employer contributions to social security in Japan" By Jyunya Hamaaki; Yasushi Iwamoto

  1. By: Michael Svarer (School of Economics and Management, University of Aarhus, Denmark)
    Abstract: This paper investigates the effect of sanctions of unemployment insurance benefits on the exit rate from unemployment for a sample of Danish unemployed. According to the findings are that even moderate sanctions have rather large effects. For both males and females the exit rate increases by more than 50% following imposition of a sanction. The paper exploits a rather large sample to elaborate on the basic findings. It is shown that harder sanctions have a larger effect, that the effect of sanctions wear out after around 3 months and that particular groups of unemployed are more responsive to sanctions than others. Finally, the analysis suggests that men react ex ante to the risk of being sanctioned in the sense that men who face higher sanction risk leave unemployment faster.
    Keywords: Sanctions, Unemployment hazard
    JEL: J6 C41
    Date: 2007–08–27
  2. By: Torben M. Andersen; Michael Svarer (School of Economics and Management, University of Aarhus, Denmark)
    Abstract: Workfare policies are often introduced in labour market policies to improve the trade-off between incentives and insurance as an alternative to benefit reductions. Most of the debate on such policies has focussed on the direct effect of those participating in the scheme, and in particular the possible locking-in effect reducing job search. In a general equilibrium search framework, we show that the effects of workfare policies critically depend on the response of those not in the programme when they take into account that workfare is a condition for remaining eligible for unemployment benefits. This implies that unemployed not yet in workfare may search more for regular jobs, and employed may accept lower wages since the outside option becomes less attractive. Introduction of workfare policies into an unemployment insurance scheme is shown to contribute to a reduction in both open and total unemployment. It is also shown that the direct search effects of workfare policies are a poor indicator of the overall effect workfare policies have on labour market policies.
    Keywords: Workfare, Labour market performance
    JEL: J0
    Date: 2008–03–31
  3. By: Jyunya Hamaaki (Graduate School of Economics, University of Tokyo); Yasushi Iwamoto (Faculty of Economics, University of Tokyo)
    Abstract: This paper reappraises Tachibanaki and Yokoyama (2008) -an empirical analysis that indicates no apparent backward shifting of employer social insurance contributions- by modifying their empirical strategy. First, we attempt to control for a spurious positive correlation between wages and employer's contribution rates by trend variables. Second, we exclude two industries from our sample that have small numbers of workers and establishments to remove sampling errors in wages. Our results imply that the social insurance burden shifts back on to employees to a certain extent, contrary to Tachibanaki and Yokoyama (2008). Our finding is consistent with other existing studies.
    Date: 2008–06

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