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Wiley InterScience | |||||||
  Fiscal StudiesVolume 23 Issue 1, Pages 1 - 49 Published Online: 2 Feb 2005 © Institute for Fiscal Studies, 2009 Published on behalf of the Institute for Fiscal Studies
Abstract | References | Full Text: PDF (Size: 365K) | Related Articles | Citation Tracking  Unemployment and workers' compensation programmes: rationale, design, labour supply and income support The author would like to thank Alan Auerbach, Bertil Holmlund, Alan Krueger, Costas Meghir and seminar participants at the Institute for Fiscal Studies and University of California, Berkeley for their comments and Bradley Heim for outstanding research assistance. Copyright Institute for Fiscal Studies, 2002 KEYWORDS J28 • J64 • J65 • unemployment benefit • labour supply • redistribution Abstract
I examine the unemployment insurance (UI) and workers' compensation (WC) insurance programmes, concentrating on labour supply, insurance and income redistribution. UI and WC increase the time employees spend out of work. Elasticities of lost work time that incorporate both the incidence and duration of claims are centred at 1.0 for UI and between 0.5 and 1.0 for WC. These elasticities are larger than elasticities typically found in studies of wage effects on hours worked by men, probably because UI and WC lead to short-run variation in wages with mostly a substitution effect and the programmes alter the participation margin. Some good evidence suggests that UI smooths the consumption of the unemployed and more clearly indicates that UI progressively redistributes resources. There is substantial evidence that injured workers suffer material hardships even with WC programmes, but research has not provided an overall picture of the insurance and redistributive aspects of WC. | 
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