Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2003:5: Improving incentives in unemployment insurance: A review of recent research

Peter Fredriksson () and Bertil Holmlund ()
Additional contact information
Peter Fredriksson: IFAU - Institute for Labour Market Policy Evaluation, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Bertil Holmlund: Department of Economics, Uppsala university, Postal: Box 513, 751 20 Uppsala, Sweden

Abstract: This paper provides a review of the recent literature on how incentives in unemployment insurance (UI) can be improved. We are particularly concerned with three instruments, viz. the duration of benefit payments (or more generally the time sequencing of benefits), monitoring in conjunction with sanctions, and workfare. Our reading of the theoretical literature is that the case for imposing a penalty on less active job search is fairly solid. A growing number of empirical studies, including randomized experiments, are in line with this conclusion.

Keywords: Unemployment insurance; search; monitoring; sanctions; workfare

JEL-codes: J64; J65; J68

38 pages, February 11, 2003

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