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The labour supply of low-skilled – incentives in the unemployment insurance systems

A comparative description based on Nordic countries

image of The labour supply of low-skilled – incentives in the unemployment insurance systems

The labour supply of low-skilled – incentives in the unemployment insurance systems. A comparative description based on Nordic countriesIn this report we describe and discuss the changing character of unemployment insurance (UI) systems in the Nordic countries in relation to the changing labour market situation of low skilled adults, from around 1990 and onwards. The focus is on how different characteristics of the national UI systems - and particularly the changes in these systems - may have affected the labour market position of low skilled by affecting their work incentives. This report has two main purposes: First, to construct a descriptive empirical basis for a discussion regarding the relationship between the design of the unemployment benefit system and the labour market performance of low-skilled compared to higher-skilled workers. The second purpose is to lay the foundation for a more systematic econometric analysis regarding the influence of the unemployment insurance systems on the labour market performance of low skilled - compared to high skilled workers in Norway, Sweden, Denmark and Finland.

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The UI systems in the Nordic – main features and reforms

In this chapter we outline and discuss the present design of UI systems in Denmark, Finland and Norway. In addition reforms which have been accomplished in these institutions since the early nineties are described with regard to their contents and main motives. We also point out results from empirical research regarding the labor market effects of these policy changes. This examination of the national UI systems is organized according to the four key characteristics of the UI systems already defined in Chapter 1: Compensation rate, maximum duration of UIB, eligibility rules and the systems for monitoring and sanctions. In addition we sketch the supplementary social security arrangements which interact with the design of the UI systems in determining the work incentives.

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