A functional system of private unemployment insurance (original publication in German)

The authors suggest a dual-system model of private unemployment insurance that includes incentives on the side of employees as well as of employers to reduce unemployment. Each employee pays insurance premiums according to his (her) individual risk of getting unemployed and according to his (her) preference with respect to the individual level and duration of unemployment payments. On the employers’ side the US system of experience rating is elaborated in such a way as to increase, via autoregressive processes, the built- in tendencies of unemployment reduction. In addition, the regulation necessary to operate this dual system is analysed.

Kiel Institute Expert