Benefit Generosity Research Articles

The effect of welfare reform on the health of the unemployed: evidence from a natural experiment in Germany

BackgroundOver the past several decades, governments have enacted far-reaching reforms aimed at reducing the generosity and coverage of welfare benefits. Prior literature suggests that these policy measures may have deleterious...

Longitudinal Associations Between Healthcare Resources, Policy, and Firearm-Related Suicide and Homicide from 2012 to 2016.

Firearm-related violence is a leading cause of mortality in the United States (US). Prior research suggests that public policy plays a role in firearm mortality, but the role of healthcare resources (physicians, insurance coverage) within the US policy context has not yet been studied. To examine how healthcare resources and social/firearm policy affect firearm-related suicide and homicide rates in the US. Longitudinal, ecological study. US. US states from 2012 to 2016 (N = 242). The outcome variables were age-adjusted, firearm-related suicide and homicide rates. Predictor variables were healthcare resources (physicians, Medicaid benefits generosity) and policy context (social policy, firearm policy) with covariates for sociodemographic factors. Healthcare provider variables did not have significant associations to firearm-related suicide or homicide. In fully saturated models, more worker protection laws, greater average population density, more alcohol regulation, and more firearm prohibition policies were associated with fewer firearm-related suicides. Higher generosity of Medicaid benefits was associated with fewer firearm-related homicides. Poverty rate was a predictor of both outcomes. This state-level study cannot make individual-level inferences. Only proxy variables were available for measuring gun ownership and actual gun ownership rates may not have been ideally captured at the state level. At the state level, there are protective associations of certain social, healthcare, and firearm policies to firearm-related suicide and homicide rates. Healthcare resources play a role in population-level firearm outcomes but alone are not sufficient to decrease firearm-related homicide or suicide.

The COVID-19 Resilience of a Continental Welfare Regime - Nowcasting the Distributional Impact of the Crisis

We evaluate the COVID-19 resilience of a Continental welfare regime by nowcasting the implications of the shock and its associated policy responses on the distribution of household incomes. Our approach relies on a dynamic microsimulation approach that combines a household income generation model estimated on the latest EU-SILC wave with novel nowcasting techniques to calibrate the simulations using external macro controls reflecting the macroeconomic climate during the crisis. We focus on Luxembourg, a country that introduced minor tweaks to the existing tax-benefit system which already contained instruments with a strong social insurance focus that gave certainty during the crisis. The income-support policy changes were effective in cushioning household incomes and mitigating an increase in income inequality in the early stages of the pandemic. The share of labour incomes dropped, but was compensated by an increase in benefits, reflecting the cushioning effect of the transfer system.Overall market incomes dropped and became more unequal. Their disequalizing evolution was, however, overpowered by an increase in tax-benefit redistribution. Net redistribution increased, driven by an increase in the generosity of benefits and larger access to benefits.These changes are mainly explained by the labour market shock, signalling the automatic stabilizers embedded in the pre-COVID system. The system was well-equipped ahead of the crisis to cushion household incomes against job losses. The methodology is scalable to other countries and well-designed to explore the impact of later stages in the COVID crisis, both economy-wide and sector-specific. The model is a real-time analysis and decision support tool to monitor the recovery, with high applicability for policymakers.

Lessons from the American federal‐state unemployment insurance system for a European unemployment benefits system

AbstractThis article reviews practices in the United States (US) federal‐state unemployment insurance (UI) system regarding applicant eligibility, benefit generosity, benefit financing and emergency measures with the aim of revealing lessons for a possible European unemployment benefit system (EUBS) for European Union (EU) Member States. We overview the US system for UI and examine important areas of federal leadership. While the US system offers some good ideas for setting up an EUBS, there are also lessons in some shortcomings of the US experience. We overview existing national UI systems in the EU and review the debate on an EUBS in the EU. We identify areas of risk for individual and institutional moral hazard in a multi‐tiered UI system and give examples of monitoring methods and incentives to ameliorate such risks. We suggest approaches for gradual system development, encouraging lower‐tier behaviour, benefit financing, and responses to regional and system‐wide labour market crises.

Parental Unemployment, Social Insurance and Child Well-Being Across Countries

Based on a unique repeated cross-sectional data set of school-aged children in Europe, the Middle East and North America, we analyze how children's subjective well-being is related to parents' employment status, depending on the institutional context. We find that parental unemployment is strongly negatively related to children's life satisfaction across countries and years. The effect is thereby moderated by the generosity of unemployment benefits. Exploiting across- and within-country variation, our results suggest that a higher benefit replacement rate alleviates the negative effects of fathers', but not mothers', unemployment. We further test the robustness of our results considering unemployment benefits jointly with social work norms. While the buffering effect of unemployment insurance remains, the spillover effects of paternal unemployment seem to be more pronounced in environments with stricter social work norms.

The Policy Drivers of Self-Employment: New Evidence from Europe

Using cross-country time series panel regressions for the last two decades, this paper seeks to identify the main policy and institutional factors that explain the share of self-employment across European countries. It looks at the aggregate share of self-employed as well as its breakdown by age, skill and gender. The generosity of unemployment benefits, and to a lesser extent, spending on active labour market policies appear to be robust determinants of the long-term share of self-employed in European countries. No significant relation could be identified between the stringency of employment protection and aggregate self-employment. However, there are significant, and oppositely signed, impacts on high- and low-skilled self-employed separately. Both the tax wedge and the minimum wage appear to be related positively to the share of self-employed in the long term, but the relation holds for some categories of workers only.

State Unemployment Insurance Reserves Are Not Adequate

Regular unemployment insurance (UI) benefits are paid from reserves held in state accounts at the U.S. Treasury. The Great Recession exhausted the majority of UI reserve accounts, and not all states have rebuilt reserves. We examine the adequacy of current state and system-wide UI reserves to weather a mild, moderate, or severe recession in the coming months. Our results suggest that a recession as severe as the average of those occurring since 1975 would cause 18 states to exhaust UI reserves. Our simulations account for the fact that several states have cut benefit generosity since the Great Recession ended. Results suggest that despite federal incentives for forward funding, reserves are insufficient in many states. By accepted standards, state benefit provisions are not excessive, but state-imposed constraints on financing make the system slow to recover from debt. We suggest modest actions for UI financing reform.

A meta-regression of the impact of policy on the efficacy of individual placement and support.

Individual placement and support (IPS) has shown consistently better outcomes on competitive employment for patients with severe mental illness than traditional vocational rehabilitation. The evidence for efficacy originates from few countries, and generalization to different countries has been questioned. This has delayed implementation of IPS and led to requests for country-specific RCTs. This meta-analysis examines if evidence for IPS efficacy can be generalized between rather different countries. A systematic search was conducted according to PRISMA guidelines to identify RCTs. Overall efficacy was established by meta-analysis. The generalizability of IPS efficacy between countries was analysed by random-effects meta-regression, employing country- and date-specific contextual data obtained from the OECD and the World Bank. The systematic review identified 27 RCTs. Employment rates are more than doubled in IPS compared with standard vocational rehabilitation (RR 2.07 95% CI 1.82-2.35). The efficacy of IPS was marginally moderated by strong legal protection against dismissals. It was not moderated by regulation of temporary employment, generosity of disability benefits, type of integration policies, GDP, unemployment rate or employment rate for those with low education. The evidence for efficacy of IPS is very strong. The efficacy of IPS can be generalized between countries.

Do Deferred Benefit Cuts for Current Employees Increase Separation?

This study examines whether deferred benefit cuts affecting current public employees encourage mid-career teachers and civil servants to separate from their employers. The analysis takes advantage of a 2005 reform to the Employees’ Retirement System of Rhode Island (ERSRI) that dramatically reduced the generosity of benefits for current workers. Importantly, the cuts applied only to ERSRI members who had not vested by June 30, 2005. High-tenure ERSRI members and municipal government employees in Rhode Island were unaffected. This sharp difference in benefit levels permits a triple-differences research design in which low-tenure ERSRI members are compared, before and after the reform, to high-tenure members, and to lowand high-tenure members of the Municipal Employees’ Retirement System of Rhode Island. The results show that the benefit cut caused a 2.4-percentage-point increase in the rate of separation, implying an elasticity of employer-specific labor supply with respect to deferred benefits of 0.28. Although state employees were more sensitive to benefit cuts than teachers, the low elasticities for both groups suggest that the labor market for public employees may not be highly competitive.

When One Size Does Not Fit All: Modernizing the Supplemental Security Income Program

The federal Supplemental Security Income (SSI) program is an important part of the safety net in the United States, paying means-tested benefits to children with disabilities, nonelderly adults with disabilities, and elderly individuals. In this article, we describe the eligibility criteria for the program, how these have changed over time, and the impact of these changes on SSI enrollment. We also show that over time, SSI has grown to serve a heterogenous population, with an array of life experiences and needs. In this context, we discuss potential reforms intended to modernize the program and increase its ability to achieve its goals. These include a proposal to raise the generosity of benefits for elderly SSI recipients, increase the incentive to work among nonelderly adult SSI recipients, and harmonize disability decision-making across medical examiners and administrative law judges.

In Search of Opportunity and Community: The Secondary Migration of Refugees in the United States

Each year the United States resettles thousands of refugees in pre-determined locations across the country. However, refugees are free to relocate upon arrival. Although this secondary migration can fundamentally alter outcomes for both refugees and the communities that host them, policymakers lack systematic data on this phenomenon. Using novel administrative data covering all adult refugees resettled between 2000 and 2014 (N≈447,000), we provide a comprehensive analysis of secondary migration patterns. A high proportion of refugees leave their initial resettlement site and migrate to a different state, although rates vary widely by origin, family ties, and arrival state. Importantly, secondary migration is driven primarily by the presence of co-ethnic networks and labor market considerations. We find no evidence that patterns of secondary migration are driven by state partisanship and the generosity of welfare benefits.

Employment Insurance: Interregional Redistribution versus Protection against Changing Labour Market Conditions

In this article, I quantitatively investigate the business cycle properties of the Canadian unemployment insurance system, Employment Insurance (EI). EI is designed in such a way that the generosity of benefits depends on regional labour market conditions and thus varies over time with the state of the macro economy as well as geographically depending on local unemployment rates. Simulations of a life-cycle model with heterogeneous agents and search frictions show that the welfare impact of the temporal changes in EI generosity is extremely small. It is dominated by the distributional effects of regional differentiation—that is, regions with persistently high unemployment rates benefit from more generous EI benefits because they are subsidized by regions with low unemployment.

The US Unemployment Insurance Scheme: A Model for the EU?

The system of unemployment insurance (UI) used in the United States has often been cited as a model for Europe. The American model illustrates that it is possible to create and maintain a UI system based on federal-state co-financing that intensifies during economic crises and thus reinforces protection and stabilisation. Central requirements and conditional funding can improve the aggregate protection and stabilisation capacity of the system. However, the architecture of the US system financially incentivises states to organise retrenchment of their own efforts for UI, which in turn leads to a divergence of benefit generosity and coverage levels. During the Great Recession, the federal government mitigated these incentives for retrenchment through minimum requirements attached to federal financial intervention. With regards to the European unemployment re-insurance system debate, the US experience implies both positive and encourageing conclusions and cautionary lessons.

Medicaid Benefit Generosity and Labor Market Outcomes: Evidence from Medicaid Adult Vision Benefits

Previous work suggests that Medicaid eligibility expansions may lead to declines in labor market activity. This paper explores the related, but novel question of whether variation in Medicaid benefit generosity alters employment outcomes. We consider adult vision benefits as a case study. Our findings suggest that vision benefits have a net positive effect on intensive margin measures including hours worked and occupational skill requirements, but no significant effect on the likelihood of being employed. These results indicate that Medicaid’s effect on labor market activity is sensitive to the set of covered services.

Medicaid Benefit Generosity and Labor Market Outcomes

Previous work suggests that Medicaid eligibility expansions may lead to declines in labor market activity. This paper explores the related, but novel question of whether variation in Medicaid benefit generosity alters employment outcomes. We consider adult vision benefits as a case study. Our findings suggest that vision benefits have a net positive effect on intensive margin measures including hours worked and occupational skill requirements, but no significant effect on the likelihood of being employed. These results indicate that Medicaid’s effect on labor market activity is sensitive to the set of covered services.

Pension Reforms and Public Sector Turnover

AbstractOver the past decade, many states have reformed their retirement systems by reducing benefit generosity, tightening retirement provisions, introducing non-defined-benefit (DB) plan options and even replacing DB plans with defined-contribution plans. Many of these reforms have affected post-employment benefits that public workers will receive when they retire. Have these reforms also affected the attractiveness of public sector employment? To answer this question, we use state-level data from 2002 to 2015 and examine the relationship between state pension reforms and public employee turnover following the reforms. We find that employee responsiveness to the reforms was tangible and that it differed by reform type and worker education. These results are important because the design of public retirement benefits will continue to influence the ability of the public sector to recruit and retain high-quality workforce.

Activation is not a panacea: active labour market policy, long-term unemployment and institutional complementarity

AbstractEvaluation studies of active labour market policy show different activation measures generate contradictory results. In the present study, we argue that these contradictory results are due to the fact that the outcomes of activation measures depend on other institutions. The outcome measure in this study is the long-term unemployment rate. Two labour market institutions are of special interest in this context: namely, employment protection and unemployment benefits. Both institutions, depending on their design, may either increase or decrease the effectiveness of active labour market policies in lowering long-term unemployment. Based on an analysis of macro-level data on 20 countries over a period of 16 years, our results show that employment protection strictness and unemployment benefit generosity interact with the way in which active labour market policies relate to long-term unemployment. Our results also indicate that, depending on the measure used, active labour market policies fit either in a flexible or in a coordinated labour market. This suggests that active labour market policies can adhere to both institutional logics, which are encapsulated in different types of measures.

The effects of social protection policies on health inequalities: Evidence from systematic reviews.

Background: The welfare state distributes financial resources to its citizens - protecting them in times of adversity. Variations in how such social protection policies are administered have been attributed to important differences in population health. The aim of this systematic review of reviews is to update and appraise the evidence base of the effects of social protection policies on health inequalities. Methods/design: Systematic review methodology was used. Nine databases were searched from 2007 to 2017 for reviews of social policy interventions in high-income countries. Quality was assessed using the Assessment of Multiple Systematic Reviews 2 tool. Results: Six systematic reviews were included in our review, reporting 50 unique primary studies. Two reviews explored income maintenance and poverty relief policies and found some, low quality, evidence that increased unemployment benefit generosity may improve population mental health. Four reviews explored active labour-market policies and found some, low-quality evidence, that return to work initiatives may lead to short-term health improvements, but that in the longer term, they can lead to declines in mental health. The more rigorously conducted reviews found no significant health effects of any of social protection policy under investigation. No reviews of family policies were located. Conclusions: The systematic review evidence base of the effects of social protection policy interventions remains sparse, of low quality, of limited generalizability (as the evidence base is concentrated in the Anglo-Saxon welfare state type), and relatively inconclusive. There is a clear need for evaluations in more diverse welfare state settings and particularly of family policies.

Evaluating the success of legislative amendments designed to reduce work disability

Substantial international variation exists in work disability compensation and rehabilitation policy, with little consensus on the most effective policy models for these systems. Legislation that governs them is frequently amended in an attempt to develop more effective and efficient systems, save costs, or improve outcomes for injured workers. A legislative amendment to the workers’ compensation system in 2010 in Tasmania, Australia, increased benefit generosity (by delaying wage replacement step-downs) and introduced a new injury management model to streamline treatment access and encourage earlier return to work. We sought to determine whether the amendments achieved their objective of reducing work disability duration. All analyses used interrupted time series to examine work disability duration in Tasmania compared with the Rest of Australia (ROA), where similar policies were not implemented, using a national workers’ compensation dataset. Data from time loss claims were included for two years before-and-after the legislative amendment introduced July 1 2010. Work disability duration initially declined in Tasmania (−0.45 weeks) compared to ROA; however, this was followed by an increasing trend of 0.11 weeks per quarter in the 2-year period following legislative amendment. Secondary analysis showed that disability duration did not significantly change for injured workers with short (<13 weeks) or long duration (>13 weeks) claims, nor did delaying the step-down in wage replacement payments from 13 to 26 weeks significantly affect the proportion of claims exceeding 13 weeks duration. In summary, we found no evidence that Tasmania’s amendments achieved the intended effect of reducing disability duration of injured workers.

Increased Benefit Generosity and the Impact on Workers' Compensation Claiming Behavior: An Interrupted Time Series Study in Victoria, Australia.

To measure the effect of legislation in Victoria, Australia that increased workers' compensation benefits, including a raised wage replacement cap for higher earners, on claiming behaviors. Controlled interrupted time series of monthly claiming volumes and median disability duration, focusing on overall effects, impact among higher earners, and by condition type. Overall claiming increased 12%, driven by back/neck (18%), and other musculoskeletal conditions (14%). Overall disability duration did not change, though increased 27% among back/neck conditions. Among higher earners, findings on claiming were mixed, while disability duration increased 33%, driven by back/neck musculoskeletal (MSK) conditions (23%). Findings for mental health conditions were mixed. The effect of benefit generosity on workers' compensation claiming and disability duration varied by earnings and condition. Effects were strongest among musculoskeletal conditions.