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Voluntary Public Unemployment Insurance

Author

Listed:
  • Donald O. Parsons

    (George Washington University, Washington D.C.)

  • Torben Tranæs

    (Danish National Institute of Social Research)

  • Helene Bie Lilleør

    (Economic Policy Research Unit, University of Copenhagen)

Abstract
Voluntary public unemployment systems are limited to a handful of countries, including Finland, Sweden, and, more substantially, Denmark. A voluntary system has the positive feature of other user-cost schemes, potentially efficient targeting of services. This presumes rational behavior as well as reasonable risk rating of premiums and the absence of worker access to alternative social programs. Using a 10% sample of the Danish population drawn from administrative data, we exploit the voluntary Danish system to explore the structure of unemployment insurance demand. The insurance take-up rate is surprisingly high, 80 percent in 1995, but varies systematically with economic incentives in a way that raises doubts about the targeting value of the current system. Political support for the Danish system may derive instead from the fact that a universal, compulsory system would generate rather modest additional net funds and with a twist--additional revenue would come disproportionately from low-wage workers.

Suggested Citation

  • Donald O. Parsons & Torben Tranæs & Helene Bie Lilleør, 1999. "Voluntary Public Unemployment Insurance," EPRU Working Paper Series 03-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Jun 2003.
    • Handle: RePEc:kud:epruwp:03-05
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    File URL: http://web.econ.ku.dk/epru/files/wp/wp-03-05.pdf
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    References listed on IDEAS

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    1. Donald O. Parsons & Torben Tranæs & Helene Bie Lilleør, 1999. "Voluntary Public Unemployment Insurance," EPRU Working Paper Series 03-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Jun 2003.
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    Cited by:

    1. Bartha, Zoltán & Sáfrányné Gubik, Andrea & Tóthné Szita, Klára, 2013. "Intézményi megoldások, fejlődési modellek [Institutional solutions, development models]," MPRA Paper 50901, University Library of Munich, Germany.
    2. Donald O. Parsons & Torben Tranæs & Helene Bie Lilleør, 1999. "Voluntary Public Unemployment Insurance," EPRU Working Paper Series 03-05, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Jun 2003.
    3. Mengus , Eric & Pancrazi , Roberto, 2015. "The Inequality Accelerator," HEC Research Papers Series 1108, HEC Paris.
    4. Jespersen, Svend T. & Munch, Jakob R. & Skipper, Lars, 2008. "Costs and benefits of Danish active labour market programmes," Labour Economics, Elsevier, vol. 15(5), pages 859-884, October.
    5. Marta Aloi & Teresa Lloyd-Braga & Manuel Leite-Monteiro, 2017. "Welfare benefit reforms and employment," Discussion Papers 2017/02, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    6. Nathaniel Hendren & Camille Landais & Johannes Spinnewijn, 2021. "Choice in Insurance Markets: A Pigouvian Approach to Social Insurance Design," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 457-486, August.
    7. Torben Andersen, 2003. "From Excess to Shortage - Recent Developments in the Danish Labour Market," CESifo Working Paper Series 933, CESifo.
    8. Torben M. Andersen & Michael Svarer, 2007. "Flexicurity: Labour Market Performance in Denmark," CESifo Economic Studies, CESifo Group, vol. 53(3), pages 389-429, September.
    9. Maczulskij, Terhi & Haapanen, Mika & Kauhanen, Antti & Riukula, Krista, 2021. "Dark Half: Decentralized Bargaining and Well-being at Work," ETLA Working Papers 89, The Research Institute of the Finnish Economy.
    10. Moller Dano, Anne & Ejrnaes, Mette & Husted, Leif, 2005. "Do single women value early retirement more than single men?," Labour Economics, Elsevier, vol. 12(1), pages 47-71, February.
    11. Mette Ejrnæs & Stefan Hochguertel, 2008. "Entrepreneurial Moral Hazard in Income Insurance: Empirical Evidence from a Large Administrative Sample," CAM Working Papers 2008-02, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    12. Salazar, C, 2007. "Determinantes de la Adopción Voluntaria del Seguro de Cesantía [Determinants of Voluntary Adoptions of Unemployment Insurance]," MPRA Paper 7693, University Library of Munich, Germany.
    13. Mette Ejrnaes & Stefan Hochguertel, 2008. "Entrepreneurial Moral Hazard in Income Insurance," Tinbergen Institute Discussion Papers 08-065/3, Tinbergen Institute, revised 12 Aug 2011.
    14. Patrick Bennett & Amine Ouazad, 2020. "Job Displacement, Unemployment, and Crime: Evidence from Danish Microdata and Reforms [The Link between Human Capital, Mass Layoffs, and Firm Deaths]," Journal of the European Economic Association, European Economic Association, vol. 18(5), pages 2182-2220.
    15. Laust Høgedahl, 2014. "The Ghent effect for whom? Mapping the variations of the Ghent effect across different trade unions in Denmark," Industrial Relations Journal, Wiley Blackwell, vol. 45(6), pages 469-485, November.
    16. Wildeman, Christopher & Fallesen, Peter, 2017. "The effect of lowering welfare payment ceilings on children's risk of out-of-home placement," Children and Youth Services Review, Elsevier, vol. 72(C), pages 82-90.
    17. Bogedan, Claudia, 2006. "Readjusting the social democratic welfare state in Denmark 1973 - 2003," TranState Working Papers 40, University of Bremen, Collaborative Research Center 597: Transformations of the State.
    18. Leschke, Janine, 2007. "Gender differences in unemployment insurance coverage: A comparative analysis," Discussion Papers, Research Unit: Labor Market Policy and Employment SP I 2007-106, WZB Berlin Social Science Center.
    19. Mette Ejrnæs & Stefan Hochguertel, 2022. "Identifying Risk-based Selection in Social Insurance: New Approaches and Findings," Tinbergen Institute Discussion Papers 22-040/V, Tinbergen Institute.
    20. Fallesen, Peter & Geerdsen, Lars Pico & Imai, Susumu & Tranæs, Torben, 2018. "The effect of active labor market policies on crime: Incapacitation and program effects," Labour Economics, Elsevier, vol. 52(C), pages 263-286.

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    More about this item

    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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