Mariacristina De Nardi, Giulio Fella, Gonzalo Paz-Pardo, 07 February 2021

The optimal size and structure of government benefit programmes crucially depend on households’ income risk and their ability to self-insure against it. This column demonstrates that in the UK, earning dynamics, such as income risk and shock persistence, differ substantially depending on age and position in the income distribution. Taking these dynamics into account when evaluating benefit policies is of crucial importance, as it dramatically changes the estimated welfare improvements. When the dynamics are incorporated, the 2016 reform of the UK’s benefit system is found to have been welfare-improving on average. 

Camille Landais, Emmanuel Saez, 29 November 2010

Much controversy surrounds the generosity of unemployment insurance in modern economies. Do generous benefits discourage workers from looking for jobs and increase unemployment? Or does unemployment in recessions simply stem from a lack of jobs? CEPR DP8132 explores the optimal level of unemployment benefits during the booms and busts of the business cycle.

Gilles Saint-Paul, 01 February 2008

France has agreed a raft of labour market reforms. Here one of France’s most market-oriented labour economists evaluates the likely impact, concluding that it’s an improvement, but heightens incentives to become unemployed.

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