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Journal Article

THE ECONOMIC IMPACT OF UNEMPLOYMENT INSURANCE IN ISRAEL / השפעות כלכליות של הנהגת ביטוח אבטלה בישראל

נעמי ליבנה
Social Security (Hebrew edition) / ביטחון סוציאלי
חוברת‎ 4/5 (תמוז תשל"ג, יולי 1973), pp. 29-40
Stable URL: https://www.jstor.org/stable/23270287
Page Count: 12
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
THE ECONOMIC IMPACT OF UNEMPLOYMENT INSURANCE IN ISRAEL / השפעות כלכליות של הנהגת ביטוח אבטלה בישראל
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Abstract

The article, which is based on a master's thesis in economics, examines the influence of the introduction of unemployment insurance in Israel with special reference to the following aspects: the change in the income level of wage-earners' families due to unemployment, the distribution of incomes and periodicity in the level of economic activity. The study was carried out by means of a model of the insurance arrangement proposed by the Committee for Unemployment Insurance and on the basis of the relevant data on the Israeli economy in the past. The following are the principal results obtained: 1. Unemployment insurance will allow a family in which the main or only breadwinner is temporarily unemployed an average income level of over 80% of its regular income in the lowest income groups and of approximately 60%-70% in the highest income groups. The drop in the level of consumption resulting from unemployment will be smaller on the assumption that during periods of temporary unemployment families are able to reduce their savings or increase their indebtedness. 2. Unemployment insurance grants reduce inequality in the distribution of incomes of Jewish wage-earners' families, particularly in periods of mass unemployment. But the share of those families whose income did not exceed IL.2,000 (in 1967-1969) falls in the total income. 3. Unemployment insurance is likely to have a stabilizing effect. In each of the methods examined it was found that this arrangement could have prevented 30%-40% of the loss of national product in 1966, 20%-30% in 1967 and 8%-15% in 1968. According to the findings of this paper it can be claimed that unemployment insurance is likely to contribute to solving the main problems connected with frictional and cyclical unemployment which generally arises from temporary difficuties and therefore harms individuals during a relatively short period. In certain cases it is possible to integrate solutions to certain types of structural unemployment too within an unemployment insurance framework especially by making the payment of unemployment grants dependent on vocational training. As regards other cases of structural unemployment, it may be necessary to operate certain types of relief work which are at present provided for people who are limited in their work capacity. The possibility of unemployment insurance reducing the incentive to work is one of its main disadvantages. This problem of the influence of transfer payments on the will to work or, to use a more general formulation: on the individual's responsibility for his own and his family's economic security, has considerable consequences with regard to social policy in general. A reasonable solution to this problem has not yet been found and it is no doubt worthy of further study and research.

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