Possibilities of transfers to unemployed people in the UK.  Non means-tested unemployment insurance for those who qualify for it (contributory Job-Seekers Allowance).  Means-tested unemployment compensation (Income- Based Job-Seekers Allowance)  Housing benefits  Child benefits  Special supplements for lone parents. Introduction Conclusions Panel data produces a different view of job loss than inferences from program rules (such as OECD) This means there is a smaller effect on poverty and job loss than Scruggs suggests Whether 20% is enough to produce a perverse labor market The emphasis on full year full time job losers, which is used in program rules, diverts the attention from people who simply have bad jobs. The welfare system in the UK is substantially means tested, therefore, large transfers are given to a small amount of people. Welfare state generosity piques the interest of economists because of perverse incentives. Perverse incentives are when generous incentives are given to people experiencing job loss which consequentially leads to more unemployment due to the over generosity of benefits Sources 1.Scruggs, Lyle and James Allan “The Material Consequences of Welfare States: Benefit Generosity and Absolute Poverty in 16 OECD Countries.” Comparative Political Studies. 39(4): Scruggs, Lyle and James P. Allan “Welfare-state decommodification in 18 OECD countries: a replication and revision” Journal of European Social Policy. 16(1): Smith, Michael, and Heather Zhang "On the use of indicators of the generosity of unemployment compensation in quantitative cross- national research". International Journal of Comparative Sociology. 52 (5): Lyle Scruggs uses program data instead of panel data in order to find the replacement rates of those unemployed. This graph compares the Replacement Rates of Scruggs using program data from OECD versus Smith using panel data from the BHPS Everything depends on how welfare state generosity is measured. Program rules usually do not take into account all the possible benefit transfer methods. Replacement Rates: a percentage of previous income given as a transfer benefit to those unemployed. Scruggs’ replacement rates are significantly lower than those found using panel data. Measuring Effects of Job Loss on Income Rosemarie Sarno, U3, BA Sociology & Prof. Michael Smith, Department of Sociology The table to the left depicts the share of benefits in total income from 1991 to 2008 by unemployment experience, derived from the British Household Panel Survey. Job losers can come from both low income or high income backgrounds, it is more about people who never get decent jobs. Welfare works by giving a small proportion of those unemployed benefits. For those who do get benefits it accounts for a large proportion of their total income. Benefits shared in total income from by unemployment experience Weeks UnemployedVariableMeanP25P50P75N wksunemp91 0 weeksbenshare weeks weeks wksunemp92 0 weeksbenshare weeks weeks wksunemp93 0 weeksbenshare weeks weeks wksunemp94 0 weeksbenshare weeks weeks wksunemp95 0 weeksbenshare weeks weeks wksunemp96 0 weeksbenshare weeks weeks wksunemp97 0 weeksbenshare weeks weeks wksunemp98 0 weeksbenshare weeks weeks wksunemp99 0 weeksbenshare weeks weeks wksunemp00 0 weeksbenshare weeks weeks wksunemp01 0 weeksbenshare weeks weeks wksunemp02 0 weeksbenshare weeks weeks wksunemp03 0 weeksbenshare weeks weeks wksunemp04 0 weeksbenshare weeks weeks wksunemp05 0 weeksbenshare weeks weeks wksunemp06 0 weeksbenshare weeks weeks wksunemp07 0 weeksbenshare weeks weeks wksunemp08 0 weeksbenshare weeks weeks We can notice that in most years benefits and transfers make up at least 90% of the total income of those unemployed for weeks in the 75th percentile, from ; Benefits make up approximately 20% of the total income for those unemployed for 1-13 weeks in the 75th percentile.