Abstract
ABSTRACTBefore 1936, private insurance against unemployment was mostly run by trade unions. Commercial companies, meanwhile, did not penetrate into this insurance branch, which is probably due to the advantages that trade unions had when dealing with adverse selection and moral hazard problems. Nevertheless, union-based unemployment insurance reached a lower level of development than other private social insurance schemes, like sickness insurance, perhaps because of the financial difficulties that economic crisis involved for unemployment funds. Also, unemployment insurance spread specially among urban and high-wage workers, although coverage rates in Spain were below those of other European countries with higher income levels. However, even in the latter private coverage against unemployment did not reach 10% of the working population. As in other European countries, Spanish unemployment union-funds implemented strict economic incentives to deal with moral hazard, but precisely this hindered the spreading of private unemployment insurance.
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