Relationship between the retirement, disability, and unemployment insurance programs: the U.S. experience

This article was prepared initially for an international conference of social security program administrators and researchers. They examined the reasons for, and implications of, a recent trend in several European countries toward making it easier to qualify for retirement or disability benefits as a way of alleviating long-term unemployment. The article notes that the United States has not followed this trend. Instead, this country has continued to use temporary extensions of unemployment insurance benefits as a way to help the long-term unemployed during recessionary periods. Since the mid-1970's, the emphasis in retirement and disability insurance programs has been to strengthen the financial integrity of these programs rather than to expand eligibility. Described here are the progression of extended benefit provisions of unemployment insurance through the most recent recession, the historical development of early retirement features in the social security program, and the more recent attention that has been paid to the financing issues that have played a central role in legislation during the late 1970's and early 1980's. Unemployment experience and trends toward early retirement are examined, along with the role of public and private employee pension plans that supplement social security retirement benefits. Preliminary data from the Social Security Administration's New Beneficiary Survey show the prevalence of such pension coverage for recent retirees and the extent to which these pension benefits were claimed before normal retirement age.     

Finding political capital for monetary tightening: Unemployment insurance and partisan monetary cycles

How do governments find the political capital to raise interest rates in pursuit of inflation stabilisation? Against common wisdom, this article shows that the ability of governments to exercise tight monetary policy largely depends on the level of unemployment insurance. Unemployment insurance is particularly useful to social democratic parties since their core constituency – labour – is the hardest hit by economic downturns. Empirical evidence from 17 OECD countries over thirty years demonstrates that high levels of unemployment insurance present a strong incentive for social democratic governments to respond more aggressively to positive changes in inflation. These findings resolve the puzzle of why partisan monetary cycles are not often observed in the literature and have important policy implications, given continued calls for scaling down social insurance.     

Dual Decentralization and Fragmented Authoritarianism in Governance: Crowding Out among Social Programmes in China

In this paper, we use city‐level datasets of social assistance programmes over 280 cities between year 2003 and 2011 to verify the existence of the crowding out between social assistance programmes and unemployment insurance in China. In other words, the expansion of social assistance programmes is associated with a reduction in the enrolment of unemployment insurance. With verifying the existence of the crowding out, this article argues that the crowding out is a result of an ineffective coordination across government departments. In the process of ‘dual decentralization,’ in which the central government has delegated welfare provision responsibility to local governments, the misalignment of incentive and institutions between central and local governments explains the ineffective coordination. Different from many studies in the literature, this paper presents an adverse consequence of China's bureaucratic incentive system in social policy implementation. Also, while the conceptual framework ‘fragmented authoritarianism’ has highlighted the policy ineffectiveness in the economic policy area, this paper contributes to this literature by illustrating the policy ineffectiveness in the social policy areas. Copyright © 2016 John Wiley & Sons, Ltd.     

Property rights and unemployment insurance reserves

Unemployment insurance (UI) laws have recently come under considerable criticism for fostering employment disincentives. Imperfections in the experience rating tax schedule has been the primary causal factor behind most of these allegations. In particular, the insurance subsidies created by the tax schedule have been blamed for distorted labor markets and for increased layoffs.This article proposes that a property rights system be established for UI reserves which would enable a firm with an unemployment insurance reserve surplus to lend voluntarily to a firm in need of reserves. Such a system would allocate reserves more efficiently and eliminate some of the disincentives effects of the current unemployment insurance scheme. A property rights system would be a second best solution to perfecting the present unemployment insurance system and making it actuarially sound. However, assigning rights to UI reserves can be implemented without challenging the special interests of the politically dominant industries that have been responsible for maintaining the imperfections in the UI system for 50 years.     

Incomes Policy in Finland: Economic and Social Effects in a Comparative Perspective

This paper examines the performance of the Finnish economy during the so-called incomes policy period, 1969-80. For this purpose Finland is compared with the other OECD countries both before and during the incomes policy period. The results suggest that in terms of economic growth, inflation and unemployment, Finnish economy has improved its performance, particularly before the economic recession of the mid-seventies. Cross-national comparisons point out that the recession has been met in various ways: some countries have restrained inflation, some unemployment. Secondly, the paper examines the effects of incomes policy agreements on the growth of social expenditure, the result being that incomes policy cannot be regarded as responsible for the growth of social expenditure in Finland. Thirdly, effects on income distribution are analyzed. Here incomes policy has played a role: income inequalities diminished during the first five years of incomes policy. Since then, they have not changed. The paper ends by discussing the impact and nature of incomes policy.     

Economic voting and welfare programmes: Evidence from the American states

While scholars have hypothesised that a strong welfare state should reduce voters' incentives to base their votes on economic outcomes, evidence for this proposition remains mixed. This article tests whether differences in welfare protections across American states affect the relationship between economic performance and support for the president's party in 430 state legislative elections from 1970 to 1989. Analysing the results of over 42,000 contests in which an incumbent was running for re‐election, it finds that while unemployment insurance programmes do not affect the importance of economic performance, the electoral fortunes of presidential co‐partisans are less strongly tied to the national economy in states with generous anti‐poverty programmes. Thus by reducing vulnerability to poverty, economic safety‐nets lower the salience of the economy and provide electoral cover for politicians during economic slowdowns.     

The politics of social spending after the Great Recession: The return of partisan policy making

Prior research shows that the effect of partisanship on social expenditure declined over time in Organisation for Economic Co‐operation and Development (OECD) countries. In this article, the author argues that the 2007/2008 recession resulted in the reemergence of partisan policy making in social spending. This was a result of mainstream parties needing to respond to the growing challenge from nonmainstream parties as well as demonstrating that they responded to the economic crisis by offering different policy solutions. Using a panel of 23 OECD countries, the author shows that since the Great Recession, partisan effects on social spending are once again significant. These effects are more likely to be observed where the salience of the Left–Right dimension is higher. In accordance with classic theories of economic policy making, left‐wing governments are more likely to increase social spending when unemployment is higher and right‐wing governments restrain social expenditure when the budget deficit is greater.     

How New Economic Ideas Changed the Danish Welfare State: The Case of Neoliberal Ideas and Highly Organized Social Democratic Interests

The article argues that new economic ideas have exerted an independent causal effect on policy change in three major areas in the Danish welfare state: unemployment insurance, early retirement, and taxation. Thereby the Danish case bears resemblance to the paradigmatic shift from Keynesianism to monetarism in the United Kingdom. However, in the Danish case this paradigmatic shift did not coincide with a political shift to a right-wing government. This makes it possible to disentangle the intimate relationship between ideas and interests. It is argued that the Danish case provides one of the clearest examples of the independent causal effects of economic ideas because the Social Democrats pursued policies that compromised with the party's historically rooted positions and with the preferences of their electorate. Ideas and solutions did not come in one fixed package, however. But the new paradigm established some basic premises that were not up for discussion.     

Labor market policy: A comparative view on the costs and benefits of labor market flexibility

I review theories and evidence on wage‐setting institutions and labor market policies in an international comparative context. These include collective bargaining, minimum wages, employment protection laws, unemployment insurance (UI), mandated parental leave, and active labor market policies (ALMPs). Since it is unlikely that an unregulated private sector would provide the income insurance these institutions do, these policies may enhance economic efficiency. However, to the extent that unemployment or resource misallocation results from such measures, these efficiency gains may be offset. Overall, Scandinavia and Central Europe follow distinctively more interventionist policies than the English‐speaking countries in the Northern Hemisphere. Possible explanations for such differences include vulnerability to external market forces and ethnic homogeneity. I then review evidence on the impacts of these policies and institutions. While the interventionist model appears to cause lower levels of wage inequality and high levels of job security to incumbent workers, it also in some cases leads to the relegation of new entrants (disproportionately women, youth, and immigrants) as well as the less skilled to temporary jobs or unemployment. Making labor markets more flexible could bring these groups into the regular labor market to a greater extent, at the expense of higher levels of economic insecurity for incumbents and higher levels of wage inequality. © 2011 by the Association for Public Policy Analysis and Management.     

Why triggers fail (and what to do about it): An examination of the unemployment insurance extended benefits program

During periods of high unemployment, many workers exhaust their unemployment insurance (UI) benefits before regaining employment. To help alleviate this problem, Congress created the extended benefits (EB) program, expanding the number of weeks of benefits available to UI recipients in high unemployment states. The EB program operates by “triggering on” additional weeks of benefits in states where unemployment and UI benefit receipt are above federally established thresholds. We analyze the performance of the EB program by creating a series of policy simulations using weekly UI claims and unemployment data from the program's inception in 1970 through the most recent economic expansion in 2005. Overall, we find that EB triggers, as currently constructed, fail as a policy tool for extending UI benefits. Minor adjustments to the triggers are unlikely to be effective. We develop an alternative set of “fix point” triggers that allow the EB program to trigger on and off in a more timely fashion. These triggers outperform all previously legislated triggers as well as other commonly proposed triggering mechanisms on criteria of timeliness, breadth, and duration. © 2006 by the Association for Public Policy Analysis and Management     

Public Finance Issues and Problems in Switzerland

Switzerland is regarded as a bastion of financial conservatism, yet the Swiss federal government presently faces annual budget deficits of the highest magnitude in recent history. This article provides an overview of measures instituted in Switzerland to control the growth of the public sector and public spending. Recent efforts to raise new tax revenues are also discussed. To place the fiscal dilemma in perspective, an introduction to the structure of Swiss national government and the budgetary process is included. In analysis of Swiss budgetary politics, particular emphasis is given to the influence of the public referendum process on the political dynamics of resource decision making. The authors also analyze the area of the Swiss budget that is growing most rapidly—mandated entitlements—especially payments for unemployment compensation. A prolonged economic recession in Europe has created high unemployment and, consequently, high demand for unemployment compensation and other social "safety net" programs and spending. The most prominent feature of the Swiss political system is that it is headed by a stable coalition government in which leadership does not alternate between different political parties. This system confronts social and policy problems in a slow and deliberate manner due to the necessity for consultation and compromise in a multi-party coalitional government. The advantage of this system is stability and prudence, the disadvantage is perhaps short-term unresponsiveness to budgetary and policy dilemmas of the type now faced in Switzerland. Parallels are drawn between the Swiss budgetary problem and that faced by the U.S. executive and Congress.     

From 'welfare without work' to 'buttressed liberalization': The shifting dynamics of labor market adjustment in France and Germany

Abstract.  During the past decade, prevailing scholarship has portrayed France and Germany as suffering from a persistent syndrome of 'welfare without work' entailing a vicious circle between stubbornly high rates of unemployment and non-wage labor costs. Scholars blame this disease on dysfunctional political arrangements, deep insider-outsider cleavages and failed systems of social partnership. As a result, the two countries are said to be more or less permanently mired in a context of high unemployment that is highly resistant to remediation. This article departs from this conventional wisdom in two important respects. First, it argues that France and Germany have undertaken major reforms of their labor market policies and institutions during the past decade and remediated many of their longstanding employment traps. Second, it shows that the political arrangements that adherents of the 'welfare without work' thesis identify as reasons for sclerosis have evolved quite dramatically. The article supports these arguments by exploring some of the most significant recent labor market reforms in the two countries, as well as the shifting political relationships that have driven these changes. In both countries, recent labor market reforms have followed a trajectory of 'buttressed liberalization'. This has involved, on the one hand, significant liberalization of labor market regulations such as limits on overtime and worker protections such as unemployment insurance. On the other hand, it has entailed a set of supportive, 'buttressing' reforms involving an expansion of active labor market policies and support for workers' efforts to find jobs. The article concludes that these developments provide reasons for optimism about the countries' economic futures and offer important lessons about how public policy can confront problems of labor market stagnation.     

Tackling unemployment in China: state capacity and governance issues

Abstract

This paper considers China's state capacity and changing governance as revealed through its policies to tackle unemployment. Despite high levels of growth, economic restructuring has resulted in rising unemployment over the last decade. The Chinese state has been able to manage job losses from state enterprises, demonstrating some state capacity in relation to this sector and some persistent command economy governance mechanisms. However both design and implementation of policies to compensate and assist particular groups among the unemployed have been shaped by weak state capacity in several other areas. First, capacity to gather accurate employment data is limited, meaning local and central governments do not have a good understanding of the extent and nature of unemployment. Second, the sustainability of supposedly mandatory unemployment insurance schemes is threatened by poor capacity to enforce participation. Third, poor central state capacity to ensure local governments implement policies effectively leads to poor unemployment insurance fund capacity, resulting in provision for only a narrow segment of the unemployed and low quality employment services. Although the adoption of unemployment insurance (and its extension to employers and employees in the private sector), the introduction of a Labour Contract Law in 2007, and the delivery of employment services by private businesses indicate a shift towards the use of new governance mechanisms based on entitlement, contract and private sector delivery of public-sector goods, that shift is undermined by poor state capacity in relation to some of these new mechanisms.     

Do bonus offers shorten unemployment insurance spells? results from the washington experiment

Unemployment insurance is intended to reduce hardship by providing labor force members with partial wage replacement during periods of involuntary unemployment. However, in performing this income maintenance function, unemployment insurance may prolong spells of unemployment. Evidence from a field experiment conducted in Illinois in 1984 suggested that offering unemployment insurance claimants a modest cash bonus for rapid reemployment would increase the speed of return to work and reduce program costs. In 1988 a similar experiment, examining several different bonus offers, was conducted in the state of Washington. Evidence from the Washington experiment indicates that bonus offers do change job seeking behavior, but that only relatively generous bonus offers—about six times the weekly benefit amount—should be expected to significantly change the behavior of people eligible for unemployment benefits.     

So far so good? Tracking the poverty eradication goal of SDGs in Kenya,Nigeria, and South Africa

This paper tracks the progress of the Sustainable Development Goals in selected countries in sub‐Saharan Africa, namely, Kenya, Nigeria, and South Africa. The study assesses economic indices such as GDP growth, employment, and poverty rate of each country to understand the present performance of these countries and the feasibility of it attaining the first goal of the Sustainable Development Goals. Considering the current economic outlook and trajectory of these countries, eradicating poverty in 2030 is highly unlikely, unless drastic measures are taken. GDP growth in Kenya is currently low, whereas the poverty and the unemployment rate are very high. Nigeria still battles with economic recovery following the recession since 2016 and a soaring poverty level. Equally, South Africa is saddled with the problem of rising poverty, unemployment, and corruption. The study recommends that cooperation between government, civil society, and the private sector needs to be drastically improved and promptly to meet the poverty eradication goal by 2030.     

进一步完善我国失业保险制度的几点思考

失业保险制度,在我国才有19年的历史.19年来,它保障了失业人员的基本生活,促进了失业人员的再就业,有力地支持了企业改革.但它还很不完善.本文从我国实际出发,借鉴国外一些好的做法,对如何进一步完善我国的失业保险制度做出几点思考.     

Economic vulnerability and economic voting in 14 OECD countries

The economic voting literature shows that good economic performance bolsters the electoral prospects of incumbents. However, disagreement persists as to whether voters in vulnerable economic conditions are more likely to engage in economic voting. It is argued in this article that a crucial factor in explaining individual‐level variation in economic voting is the degree of exposure to economic risks, because risk exposure affects the saliency of the economy in voting decisions. In particular, the focus is on job insecurity and employability as key determinants of economic voting patterns. The article hypothesises that the extent of economic voting is greater in voters who are more vulnerable to unemployment and less employable in case of job loss. Support for these hypotheses is found in a test with a dataset that combines survey data on incumbent support with occupational unemployment rates and other measures of exposure to economic risks.     

Moral consensus in a secularising society: The Irish divorce referendum of 1986

The research reported here constitutes a part of a major project on democratic transition in Southern Europe. The article seeks to bring Southern Europe within the ambit of comparative welfare state analysis by (1) developing time‐series models of social insurance growth in Greece, Portugal and Spain and (2) for the first time, incorporating these nations’ social insurance experience into a model of social security development for the advanced nations. The time‐series analysis centres on the formative interaction of democratic transition with socio‐economic, demographic and policy influences. The cross‐national analysis points to the crucial role of both democratisation processes and cultural differences; as well as the standard repertoire of explanations in this field of research.     

Reforming the French welfare state: Solidarity,social exclusion and the three crises of citizenship

The article explores recent debates about citizenship and social provision in France. It examines the essential concepts comparable to ‘social citizenship’, as understood in British debates, and the role that they have played in the development of the French welfare state. Its conclusions are threefold. First, social provision in France is founded on the principle of solidarité, which holds that all citizens face a series of social risks (unemployment and illness) that make them dependent on one another. Second, as the traditional insurance principle (the core of the French welfare state) is founded on socio‐economic conditions (concerning the nature of social interdependence and social risk) that no longer exist, the emergence of these social ills has led to not one but three crises of citizenship: a crisis of coverage, of legitimacy and of participation. Third, while it is too early to draw definitive conclusions, recent policy reforms suggest that the difficulties faced by French welfare are encouraging moves towards the British model of tax‐based (rather than insurance‐based) financing of social provision.     

Pain tolerance: Economic voting in the Czech Republic

Several theoretical explanations have been proposed to explain the mixed evidence of economic voting in post-communist countries. Using aggregate-level data, this article relaxes the assumption of parameter constancy and employs rolling regression analysis to track fluctuations in parameters over time. The results contradict the existing theories of economic voting in postcommunist countries. As an alternative explanation, the article suggest that voters have a level of pain tolerance below which the economy will not play a role in evaluations of the government; voters will use economic indicators to punish and reward incumbent government only if the economic indicators exceed their pain tolerance. For example, in the Czech Republic, voters will not start punishing the incumbent party until inflation climbs above 13.44%. However, Czech voters are less tolerant of unemployment and will punish the incumbent when unemployment exceeds 8.82%.