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Abstract
Generous unemployment benefits are a conventional explanation of the high rates of unemployment in many OECD countries. However, this perception has been challenged on the basis that cross-national evidence comes only from regression analyses of unemployment on the OECD's gross replacement rate but that results are not robust to improved, multidimensional measures of generosity. In this article, I conduct a detailed empirical analysis of how social welfare programs affect unemployment in 17 OECD countries, from 1975 to 2000, using a detailed concept of labor “decommodification” to make cross-national comparisons of generosity. The results show that unemployment benefits remain an important, robust determinant of unemployment even when the new measure is used.
ACKNOWLEDGEMENTS
This article is based on my thesis for the degree of Master of Arts (MA) in Economics from the University of British Columbia, 2009. I thank Robert Dimand, Thomas Lemieux and Felice Martinello for their comments and advice on earlier versions of this work and two anonymous referees for their help in bringing this article to its current form.
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Derek Messacar
Derek Messacar is a PhD Candidate in the Department of Economics, University of Toronto. Prior to this, he received his Master of Arts in Economics from the University of British Columbia and his Honors Bachelor of Arts in Economics from Brock University. Messacar's areas of research include public finance, labor economics, the economics of education, and comparative social policy.