Arie Kapteyn, Elena Stancanelli, 17 April 2021

The COVID-19 pandemic has meant that more people are working from home and women are disproportionately losing paid work. This column uses daily activity diaries from the American Time Use Survey to look back at the impact of the unemployment benefit extensions that were triggered by the Great Recession on hours worked from home. The overall picture is one of increased gender inequality in the labour market, with women but not men increasing work hours and effort in response to the Great Recession and the consequent changes in the duration of unemployment benefits. 

Catarina Midões, Mateo Seré, 06 February 2021

The COVID-19 outbreak has induced dramatic economic shocks in European countries. Using ECB survey data, this column examines households’ financial vulnerability to an income shock in seven European countries and assesses the degree of protection awarded to employees by COVID-19 employment protection schemes. It finds that 18.2 million individuals, or 7% of the population of the countries analysed, cannot cover one month of food and utilities by resorting to their deposits, pensions, and public transfers. Importantly, there is a significant drop in the number of vulnerable with COVID-19 unemployment benefits. Rent and mortgage suspensions are more effective in some countries than in others.

Christopher Busch, David Domeij, Fatih Guvenen, Rocío Madera, 17 October 2018

Workers experience income volatility over their lifetime due to changes in both individual and macroeconomic conditions. Using panel data from the US, Germany, and Sweden, this column analyses how the probability of income losses and gains changes systematically over the business cycle. Downside risk increases in recessions, while upside chance is reduced. However, tax and transfer programmes blunt some of the largest declines in incomes in recessions.

Ioana Marinescu, 01 March 2016

During the last recession the US experienced some of the highest unemployment rates in its history, prompting the government to dramatically extend the duration of unemployment benefits. Economists have since debated whether this action helped or hindered the recovery of the labour market. This column finds evidence of a ‘silver lining’ effect – extended unemployment benefits led people to submit fewer job applications, but this reduction increased the chances of each application being successful. Hence the overall impact of extending benefits on aggregate unemployment was rather small.

Claudio Michelacci, Hernán Ruffo, 18 November 2014

Like any insurance mechanism, unemployment benefits involve a trade-off between risk sharing and moral hazard. Whereas previous studies have concluded that unemployment insurance is close to optimal in the US, this column argues that replacement rates should vary over the life cycle. Young people typically have little means to smooth consumption during a spell of unemployment, while the moral hazard problems are minor – regardless of replacement rates, the young want jobs to improve their lifetime career prospects and to build up human capital.

Torben M Andersen, 27 September 2010

Springing from the debate over the Danish flexicurity system, the author of CEPR DP8025 outlines a model in which incentive effects of tax-financed unemployment benefits are balanced by direct and indirect insurance benefits. Such benefits may increase labour market flexibility by making job searches less risky for workers.

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