Journal Article

Choosing a System of Unemployment Income Support: Guidelines for Developing and Transition Countries

Milan Vodopivec

in The World Bank Research Observer

Published on behalf of World Bank

Volume 21, issue 1, pages 49-89
Published in print January 2006 | ISSN: 0257-3032
Published online February 2006 | e-ISSN: 1564-6971 | DOI: http://dx.doi.org/10.1093/wbro/lkj003
Choosing a System of Unemployment Income Support: Guidelines for Developing and Transition Countries

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Mounting evidence suggests that excessive job protection reduces employment and labor market flows, hinders technological innovations, pushes workers into the informal sector, and hurts vulnerable groups by depriving them of job opportunities. Flexible labor markets stimulate job creation, investment, and growth, but they create job insecurity and displace some workers. How can the costs of such insecurity and displacements be minimized while ensuring that the labor market remains flexible? Each of the main unemployment income support systems (unemployment insurance, unemployment assistance, unemployment insurance savings accounts, severance pay, and public works) has strengths and weaknesses. Country-specific conditions—chief among them labor market and other institutions, the capacity to administer each type of system, and the size of the informal sector—determine which system is best suited to developing and transition countries.

Journal Article.  14292 words. 

Subjects: Development Planning and Policy

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