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.
Unemployment and workers' compensation programmes: rationale, design, labour supply and income support
Article first published online: 2 FEB 2005
Volume 23, Issue 1, pages 1–49, March 2002
How to Cite
Meyer, B. D. (2002), Unemployment and workers' compensation programmes: rationale, design, labour supply and income support. Fiscal Studies, 23: 1–49. doi: 10.1111/j.1475-5890.2002.tb00053.x
- Issue published online: 2 FEB 2005
- Article first published online: 2 FEB 2005
- unemployment benefit;
- labour supply;
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.