Life Courses, Diversity and the Reform of the Unemployment Insurance Act

Abstract

The understanding of diversity in life courses is an important stimulus for redesigning and modernising social security systems. A number of measures, such as leave arrangements, have been introduced in the past. These measures allow employees to make combinations and transitions and enable them to deal with the risks associated with these transitions, for example, a reduction in income or a loss of social security entitlements. However, there has been little empirical analysis of the effectiveness of these arrangements from a life course perspective.This paper examines one specific arrangement, namely the facility of care credits (in Dutch: ‘verzorgingsforfait’) in unemployment insurance. The aim of this provision is to amend the entitlement conditions for unemployment insurance benefit for people who have not worked for some time due to caring for young children. With these credits the period interrupted for care of children is equated with a period of actual work. The care credits were introduced in 1987, but partially abolished in 2004. The main argument for abolition was a change in women's labour market participation behaviour; women no longer interrupt their careers following childbirth, they adjust their working hours. For this reason, it is argued that the need for care credits no longer exists. This conclusion, however, has not been corroborated by empirical evidence.To fill this gap, we present an empirical analysis of the effectiveness of care credits. We use panel data of the Institute of Labour Studies (OSA), for the period 1990–2002. The results show that the importance of this arrangement has in fact not declined for women. Furthermore, from the data we can conclude that these care credits are particularly important for women with low educational qualifications and women with two or more children.