Welfare State Institutions, Unemployment and Poverty - A comparative study of EU countries M. Azhar Hussain & Olli Kangas Danish National Institute of Social Research Herluf Trolles Gade 11 DK-1052 Copenhagen

Structure of the presentation / paper the aim of the paper data institutional set ups of national unemployment insurance schemes the incidence of poverty in Europe institutions and consequences

The aim of the paper is to study how various institutional set ups of national social security / unemployment insurance programs mitigate the effects of unemployment (or employment) more specifically the paper addresses these questions: –what is the incidence of poverty among the employed and unemployed in different countries –how is the risk of poverty changed when the individual is employed (year t) and than becomes unemployed (year t+1): poverty problems –what are the poverty risks for long-term unemployed (unemployed in t and t+1): social exclusion problems –what happens when the individual gets employment (unemployed t, employed t+1): disincentive problems

Data on unemployment insurance Characteristics of the unemployment insurance system: 1) level of income loss compensations (net benefits in relation to net wages) = generosity of the unemployment insurance systems. 2) the degree of universality (what is the proportion of labour force covered by the scheme). And 3) the duration of the benefit period and qualification conditions. –these data come mainly from Social Citizenship Indicators Project (SCIP) housed at the University of Stockholm. – replacement levels for different income groups are derived from OECD data bases –Gre, Por & Spa data are from OECD The second data-base is the European Community Household Panel (ECHP) that contains panel data for most European Union countries for

The European Community Household Panel (ECHP) survey based, standardised questionnaire annual interviewing of a representative panel of households and individuals in each country –covering a wide range of topics: income, health, education, housing, demographics and employment characteristic, etc. The total duration of the ECHP was 8 years, running from 1994 to In the first wave, i.e. in 1994, a sample of some 60,500 nationally represented households - i.e. approximately 130,000 adults aged 16 years and over - were interviewed in the then 12 Member States. Austria (1995) and Finland (1996) have joined the project since then. Data for Sweden are available only for 1997

Generosity I

Generosity II those who are good for the good are good also for the poor

Overall Generosity (MEAN FOR 0.65, 1 AND 1.5 APW) AND Universality

Correlations between indicators of unemployment insurance 0,67APWAPW1,5APWUNIVWAIT DAYS APW.77* 1,5APW.60*. 74** UNIV WAIT DAYS DURATI ON

Changes in LM-status from t to t+1

Labour market transitions and poverty rates in year t

Unemployment insurance indicator Poverty among the unemployed Poverty among those who became unemployed Poverty among those who unemployed in 2 consecutive years Difference[ in poverty rates between employed and: Those who became unemployed Those who unemployed in 2 consecutive years Generosity for 65*APW -.64* *.32.62* Generosity for APW -.56*-.58* *.44 Generosity for 1.5*APW Overall generosity -.56* Waiting days Duration Coverage ** [1][1] Differences are negative, therefore, the interpretation of correlations must be ‘reversed’. Correlations between insurance characteristics and poverty rates

Generosity of unemployment insurance and poverty (%, mean for the whole period) among the unemployed.

Generosity of unemployment insurance and poverty (%) among those who were employed but became unemployed and difference in poverty rates among the employed and those who became unemployed.

Generosity for.67*APW and poverty rate among long-term unemployed and changes in poverty rates (%-units) for the employed and long-term unemployed.

Incentives

Generosity of unemployment scheme and transitions in labour market statuses t to t+1

no relationship at macro level there might be relationship at micro level