Unemployment and Other Non-employment Benefits

Unemployment benefit systems in most OECD countries have become more generous since the early 1960s: the coverage rate has increased, the level of benefits has increased relative to the predisplacement wages, and maximum benefit periods in unemployment-insurance systems have become longer. Moreover, work-availability and willingness-to-work requirements have most likely been enforced less effectively in the high-unemployment environment since the late 1970s. The changes in benefit systems have contributed to higher unemployment, but may also have increased labor-force participation. The article stresses the potential importance of invalidity, early-retirement and sickness benefit systems for labour market outcomes. In half of OECD countries the number of recipients of these benefits exceeds the official numbers of unemployed. Higher replacement ratios in these alternative systems than in unemployment insurance may encourage a migration towards the higher benefit systems, but the extent to which this happens depends on administration of the schemes. Copyright 1995 by Oxford University Press.