Unemployment Insurance: The Role of Electoral Systems and Regional Labor Markets
24 Pages Posted: 19 Sep 2004
Date Written: September 17, 2004
Levels of insurance against unemployment vary considerably across countries. Replacement rates, the ratio relating income from unemployment to what people earned when they were employed, are higher in countries with proportional electoral systems than in countries with majoritarian system. Also, replacement rates are positively correlated with per capita income and negatively correlated with the countries' unemployment rates. We develop an electoral competition model that can replicate those stylized facts.
Keywords: Unemployment insurance, electoral system, electoral competition, regional labor markets
JEL Classification: J65, D72
Suggested Citation: Suggested Citation