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Work incentive and other effects of social assistance and unemployment benefit policy in the Czech Republic

Author

Listed:
  • Katherine Terrell

    (CERGE-EI, Politickych Veznu 7, CZ-11121 Prague, Czech Republic)

  • Michaela Erbenova

    (CERGE-EI, Politickych Veznu 7, CZ-11121 Prague, Czech Republic)

  • Vit Sorm

    (CERGE-EI, Politickych Veznu 7, CZ-11121 Prague, Czech Republic)

Abstract

In this paper we provide an account of most of the passive labor market policies (unemployment compensation, social assistance, state social support and the pension system) in the Czech Republic during the 1990-1996 period. The eligibility requirements and benefit levels are described in great detail. Using Labor Force Survey data, we compare the characteristics of unemployed people receiving unemployment benefits with those receiving social assistance and those not receiving any benefits and we find significant differences in their characteristics. Finally, we provide an analysis of the work disincentive effects of the unemployment and social assistance benefits by comparing these benefits to market wages and by analyzing the effect of being in the system on the duration of unemployment of two cohorts of unemployed in 1994 and 1995. We find that social assistance benefits are fairly generous for low income families with more children, individuals with these characteristics have a higher probability of receiving social assistance and they tend to stay unemployed longer than those people with relatively fewer dependants. We conclude that the social assistance scheme seems to be having some disincentive effects for at least one group in the population.

Suggested Citation

  • Katherine Terrell & Michaela Erbenova & Vit Sorm, 1998. "Work incentive and other effects of social assistance and unemployment benefit policy in the Czech Republic," Empirical Economics, Springer, vol. 23(1/2), pages 87-120.
    • Handle: RePEc:spr:empeco:v:23:y:1998:i:1/2:p:87-120
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    Citations

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    Cited by:

    1. Lucia Mangiavacchi & Paolo Verme, 2013. "Minimum income in a transition economy," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(4), pages 683-712, October.
    2. Alfonso Alba & Jose Maria Arranz & Fernando Muñoz-Bullón, 2012. "Re-employment probabilities of unemployment benefit recipients," Applied Economics, Taylor & Francis Journals, vol. 44(28), pages 3645-3664, October.
    3. Jan Svejnar, 1996. "Pensions in the Former Soviet Bloc: Problems and Solutions," William Davidson Institute Working Papers Series 14, William Davidson Institute at the University of Michigan.
    4. Alba, Alfonso & Arranz, José M. & Muñoz-Bullón, Fernando, 2006. "Unemployment duration, unemployment benefits and recalls," DEE - Working Papers. Business Economics. WB wb066218, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    5. José Mª Arranz & Juan Muro, 2004. "An extra time duration model with application to unemployment duration under benefits in Spain," Hacienda Pública Española / Review of Public Economics, IEF, vol. 171(4), pages 133-156, december.
    6. International Monetary Fund, 2004. "Czech Republic: Selected Issues," IMF Staff Country Reports 2004/265, International Monetary Fund.
    7. Karoly Fazekas & Zsombor Cseres-Gergely & Agota Scharle (ed.), 2008. "The Hungarian Labour Market 2008," The Hungarian Labour Market Yearbooks, Institute of Economics, Centre for Economic and Regional Studies, number 2008, December.
    8. Feldmann Horst, 2002. "Labour Market Policies in Transition Countries: An Austrian-Economic Assessment," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 12(4), pages 1-27, December.
    9. Stephen Whelan, 2010. "The Interaction between Income Support Programs," LABOUR, CEIS, vol. 24(4), pages 407-440, December.
    10. Ondřej Schneider & Tomáš Jelínek, 2005. "Distributive Impact of Czech Social Security and Tax Systems: Dynamics in Early 2000s," Prague Economic Papers, Prague University of Economics and Business, vol. 2005(3), pages 221-237.

    More about this item

    Keywords

    Czech Republic · passive labor market policies · unemployment duration;

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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