Category: Labour Economics and Unemployment Insurance
Providing unemployment insurance can help improve labour force and economic outcomes
Countries have sought to design and implement unemployment insurance programmes to provide benefits to labourers to compensate for unemployment. Unemployment insurance prevents the unemployed from falling under the poverty line, helps put more money back into the economy, and boosts GDP and employment1. However, countries have to determine the balance between providing equitable coverage for the unemployed, while maintaining incentives to find jobs.
Whiteshield Partners has designed a methodology for unemployment insurance programmes that allows policy makers to achieve this balance. Based on actuarial insurance modelling and informed by country benchmarking across the OECD, the model helps policymakers design unemployment insurance programmes tailored to their countries’ specific needs.
Unemployment models show the relationships between parameters, such as benefit amounts and duration, economic assumptions, such as GDP and unemployment, and needed contribution rates
The Whiteshield Partners unemployment insurance model allows for policy makers to determine population covered, how to fund the programme, and the benefits to the qualified unemployed. In addition, policy makers can input factors, such as the unemployment rate, labour force growth rate, and GDP growth rate to account for potential economic impacts on the model.
The model solves for the contribution rate, accounting for the parameters inputted by the policy makers and the possibility for economic shocks
Based on the chosen parameters, and inputted micro and macro factors, the model provides the contribution rate needed to ensure a solvent fund. Notably, the model accounts for economic shocks, such as unemployment increases, and generates different simulations.
Example output of the Whiteshield Partners Unemployment Insurance Model 2
1 United States Department of Labor. Available at: https://www.dol.gov/dol/maps/euc/euc.htm
2 Note this output does not reflect any country’s unemployment insurance model