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Besides their common link with unemployment, unemployment benefits are also relevant to the decision to become an entrepreneur. We thoroughly explored this relationship for a panel of 23 EU countries over the period 2001–2019. Our results demonstrate that generous unemployment compensations hinder entrepreneurial initiative, and those opportunity entrepreneurs, who are more likely to create new jobs and innovation, are affected more. Contrary to common belief, we find an unequal pattern of effects, with higher benefits being more detrimental at the beginning of the unemployment spell. A favourable policy framework results in being relevant for entrepreneurial endeavours on its own; in addition, high-quality policies and programmes for entrepreneurs are found to temper the negative effects of large unemployment benefits on new business creation during long unemployment spells. Our results support the call for properly designed unemployment benefit systems (as both level and time pattern) that ensure an optimum balance between adequate income replacement and poverty prevention, on the one hand, and limited side effects on new venture creation, on the other hand.Plain English SummaryGenerous unemployment payments can either “make or break you”! In simple words, while social benefits may contribute to income support and poverty prevention among the unemployed, these can also harm the economy by breaking one of its most important engines: entrepreneurship. By focusing on 23 EU countries, the paper highlights a negative impact of unemployment compensations on overall but also opportunity entrepreneurs, while the effects on necessity entrepreneurs are inconclusive. New business creation is inhibited when unemployment benefit systems offer generous compensations, especially at the beginning of the unemployment spell. At long unemployment durations, high-quality policies and programmes for entrepreneurs efficiently act towards diminishing such side effects. Our findings suggest that, when choosing the design features of social security systems, policymakers should definitely consider their adverse impact on entrepreneurship. Even when unemployment benefits are large, their side effects could be limited by compensatory measures, such as stricter job-search requirements or allowing unemployed individuals to keep receiving compensation while in the process of creating a new business.

A pandemic may change the use of social protection systems. In this article, we compare Scandinavian reform trajectories of unemployment benefits and sickness benefits following the COVID-19 pandemic. From an institutional theory perspective, we have analyzed official documents on regulations proposed in government bills, public inquiries, reports, and secondary literature published between March 2020 and December 2023, as well as interview data from key actors representing the state, the social partners, and related stakeholder organizations. The findings show that Denmark and Norway implemented mostly provisional reforms and thus ended in path reinforcement. In Sweden, on the contrary, numerous provisional reforms during the pandemic turned out to become permanent in the post-pandemic period. As the pandemic legitimized permanent changes that in some cases had been debated for a long time in Sweden, it thus came to act as a path-clearing policy accelerator.

The role of labor market institutions and policies has received great attention throughout the history of labor economics. Labor market institutions are responsible for a wide range of policies, regulations, and organizations that affect the labor market, though their impact on employment can vary depending on the specific institutions and the economic context across countries. This entry attempts to provide an overview of five main labor market institutions and policies, i.e., the minimum wage, employment protection, the power of unions, active labor market policies, and unemployment insurance/unemployment benefits. It also presents theoretical expectations of their effects on employment outcomes and collates relevant results from the related literature, focusing mainly on the most recent empirical evidence. Finally, this entry provides insights regarding labor market institutions and offers proposals for shaping the labor market landscape.

This paper assesses changes in the dynamics of applications for unemployment benefits in response to the abolition of regional restrictive measures during the first wave of COVID-19 spread in Russia. This assessment is interesting from the perspective of developing anti-crisis support measures for the population. The assessment is based on weekly-regional panel data using the staggered difference-in-differences method. After the lifting of restrictive measures, the number of new applications for unemployment benefits does not decrease significantly. The result remains robust when an alternative measure of the stringency of restrictions is used, such as an indicator for the validity period of digital passes instead of data on the stages of lifting restrictions. A comparison of official data on the effect of restrictive measures with the Yandex self-isolation index is provided.

Purpose - Economic theory predicts that unemployment benefits may increase expected income and reduce its volatility, thereby attracting immigrants to countries which implement such programs. This article aims to explore whether and how changes in countries' unemployment benefit spending (UBS) affect immigration.Design methodology approach - Data are collected for 19 European countries over the period 1993-2008. The relationship between immigration flows and UBS is first tested using the OLS technique. Instrumental variable (IV) and generalised method of moments (GMM) are then used to address reverse causality.Findings - While the OLS estimates suggest the existence of a moderate within-country welfare magnet effect for the inflows of non-EU immigrants, the IV approach reveals that the impact is substantially smaller and statistically insignificant when GMM techniques are implemented.Research limitations implications - Since information on the immigrants' country of origin is not available, it is not possible to exclude that for immigrants coming from certain areas, unemployment benefits constitute a strong incentive to immigrate. This hypothesis awaits further research, once detailed data is available.Originality value - This paper complements previous literature on immigration and welfare by exploring the endogenous nature of welfare spending. The empirical results provide insights into the interaction between immigration and welfare policies.

The idea of universal basic income (UBI) has been attracting increasing attention globally over recent years. However, research on the individual and institutional determinants of UBI support is scarce. The present study attempts to fills this gap by analysing workers’ attitudes towards UBI schemes in 21 European welfare states and focusing on the roles of precarious work (i.e. part-time work, temporary employment, low-skilled service employment, and solo self-employment) and unemployment benefit generosity (i.e. net replacement rate, payment duration, and qualifying period). We estimate fixed and random effects logistic models by merging country-level institutional data with the European Social Survey Round 8 data collected in 2016. The findings show that temporary employment is associated with positive attitudes towards UBI schemes, whereas other types of precarious work do not have significant influences. In addition, the results reveal that the more generous a country’s unemployment benefits, the less likely are workers in that country to support UBI schemes.

PurposeFollowing the COVID-19 outbreak, there are concerns whether economies are becoming farther from equality and competency. While this matters to every economy, it is more crucial for developing ones who already suffer from income inequalities and lack of competency. The purpose of this paper is to address this issue.Design/methodology/approachThis study uses an administrative data from the Iran's Social Security Organization (ISSO) that provides insurance to workers entitled to the Labor Law of Iran. The data contain more than 7,000,000 workers. The authors assess heterogeneous impact of the first wave of the pandemic by firms' size and average payment.FindingsThe authors’ estimation results indicate that, following the initiation of the pandemic, the workers whose corresponding firms are smaller, overall, are more prone to the pandemic and are more likely to submit a request for unemployment benefits. However, the relation is neither homogeneous across sectors nor linear among micro-sized firms. Few sectors indicate a positive relationship between size and likelihood of request submission, including cultural activity, shoemaking and clothing sectors. Besides the size, the authors investigate whether pay grades could explain the probability of becoming unemployed after the pandemic. Results show that workers whose corresponding firms pay less are more likely to submit a request. This is robust within different sectors.Research limitations/implicationsThe ISSO dataset is not a panel, so the authors cannot employ methods of causal inferences. The authors’ results should be seen as correlation; however, due to exogeneity and sharpness of the pandemic the result infers to some degree of causality. The data does not cover the informal sector, so the estimates are at lower boundary.Originality/valueAdministrative data on unemployment benefits during COVID-19 show that the pandemic interferes with competition by forcing low-paid workers and small firms to exit the market. This is an alarm for the competition in every economy, specially developing ones.

Contrary to standard search models predictions, past studies have not found a positive effect of unemployment insurance (UI) on reemployment wages. We estimate a positive UI wage effect exploiting an age-based regression discontinuity design in Austria. A search model incorporating duration dependence predicts two countervailing forces: UI induces workers to seek higher-wage jobs, but reduces wages by lengthening unemployment. Matching-function heterogeneity plausibly generates a negative relationship between the UI unemployment-duration and wage effects, which holds empirically in our sample and across studies, reconciling disparate wage-effect estimates. Empirically, UI raises wages by improving reemployment firm quality and attenuating wage drops.

This paper provides a novel justification for a declining time profile of unemployment benefits that does not rely on moral-hazard or consumption-smoothing considerations. We consider a simple search environment with homogeneous workers and low- and high-productivity firms. By introducing a declining time profile of benefits, the government can affect the equilibrium wage profile in a manner that enhances the sorting of workers across low- and high-productivity firms. We demonstrate that optimal government policy depends on the dispersion and skewness of the firms’ productivity distribution.

There has been a strong interest in short-time work (STW) schemes during the global financial crisis. Using data for 23 OECD countries for the period 2004 Q1 to 2010 Q4, this paper analyses the quantitative effects of STW programmes on labour market outcomes. Special attention is given to the dynamic aspects of the relationship between output shocks and labour market outcomes. The results indicate the STW raises hours flexibility by increasing the output elasticity of working time and helps to preserve jobs in the context of a recession by making employment and unemployment less elastic with respect to output. A key finding is that the timing of STW is crucial. While STW helped preserving a significant number of jobs during the crisis, its continued use during the recovery may have slowed the job-content of the recovery. By the end of 2010, the net effect of STW on employment was negligible or may even have become negative. However, the gross impact of STW on the number of jobs saved per quarter remains large and positive in the majority of countries.