Unemployment Accounts – A Finnish Application

Määttänen NikuSalminen Tomi

We consider a reform that would replace the current Finnish unemployment insurance (UI) scheme with individual unemployment accounts. The reform would provide additional pensions for individuals who end up with a positive account balance at retirement age without restricting unemployment benefits relative to the current system. At the same time, the reform is likely to improve labour supply incentives, at least for some individuals. The question is whether such a reform would be self-financing. The fiscal effects of the reform depend crucially on the distribution of lifetime unemployment and the extent to which the reform would increase labour supply. We use a micro panel comprising a representative sample of 1/3 of the Finnish population and covering the period 1988-2010 to estimate the distribution of lifetime unemployment and to simulate how the unemployment accounts would evolve. We assume that the reform improves labour supply incentives only via the extensive margin and find that it is likely to be self-financing if the labour supply elasticity at the extensive margin is about 0.16 or higher. We also experiment with integrating UI with the pension system.

Julkaisun tietoja

Osa tutkimuksia
Tutkimus aktiivisesta työvoimapolitiikasta (ml. työpankkikokeilun arviointi) ja työttömyysturvasta ja niiden vaikutuksista työttömyyteen ja työllisyyteen [Valmistunut]
Osa ohjelmia
Sarja
ETLA Working Papers 29
Päiväys
21.04.2015
Keywords
unemployment insurance, unemployment accounts, lifetime unemployment
ISSN
2323-2420, 2323-2439
Jel
H53, H55, J65
Sivuja
32
Hinta
15 €
Painoversion saatavuus
Saatavilla
Kieli
englanti