DEISIP

DESIGN AND EVALUATION OF INNOVATIVE SOCIAL INSURANCE POLICIES

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 Obiettivo del progetto (Objective)

'The following proposal aims at the design and evaluation of innovative social insurance policies (DEISIP) as alternatives to current policies applied by governments in industrialized countries. The study of Social Insurance (SI) policies is motivated by the high and rapidly increasing total expenditure on SI policies in OECD countries. These expenditures have increased on average across OECD countries from 16% of GDP in 1980 to 21% in 2003 (OECD, 2007). Given these statistics, governments throughout the world are keen on either finding alternative policies to the existing ones or increasing the efficiency of current policies. In order to address these issues the study will use Dynamic Stochastic General Equilibrium (DSGE) models with heterogeneous agents. This type of models is becoming extremely influential in macroeconomic for studies of economies that involve dynamics, uncertainty and policy design. This proposal is composed of three sub-projects, each dealing with at least one SI policy. The unifying theme of all projects is the analysis of creative policies that have strong relevancy for economic outcomes through in-depth welfare examination. The first sub-project is Unemployment insurance over the business cycle. In this sub-project, I will study state-dependent policies towards unemployed workers, i.e., I will allow the characteristics of the UI policy, such as the duration and the level of payments, to change over the business cycle in an optimal way. The Second sub-project is Integration of social insurance policies. In this sub-project, I will examine the potential for a welfare gain by integrating several SI policies, i.e. allow households to use funds saved in a specific account for a variety of purposes such as out-of-pocket health expenditures, and housing. Since the events covered by SI policies - such as illness, unemployment, and retirement age - are not perfectly correlated, there is a potential welfare gains from integration of these policies'

Introduzione (Teaser)

Expenditure on current social insurance (SI) policies is rising rapidly in developed countries. An EU-funded project is looking at both enhancing current policies and creating novel substitutes.

Descrizione progetto (Article)

The accelerating growth of already steep public expenditure on SI in Organisation for Economic Co-operation and Development (OECD) countries is leading governments to act. The 'Design and evaluation of innovative social insurance policies' (DEISIP) project is employing macroeconomic prediction models to make existing policies more efficient and to present alternatives.

Project activities are focusing on three different types of SI policies. The economic downturn increases unemployment insurance (UI) benefits as well as their length of time. The team is studying UI policies throughout the fluctuations that an economy experiences. They are evaluating the duration and level of benefits in relation to two contrasting economic approaches.

Higher benefits may lead the unemployed to stop looking for a job systematically or to decline employment offers. Conversely, higher benefits may inspire the jobless to seek training that results in a change in career and competences. However, those in training do not actively seek work, thus stalling the economy. Findings will result in a UI policy that is best adapted over the business cycle.

Researchers are looking into the prospect of combining several SI policies and how this can potentially improve the welfare of beneficiaries. They will also take into account the choices and incentives offered to workers and the unemployed, as well as how they are affected by such policies.

Lastly, researchers intend to develop and assess social security policy based on beneficiary age as it concerns contribution deposit rates and their savings' risk level. The objective is to find the ideal deposit and risk conditions over the course of a beneficiary's life.

DEISIP is expected to make a socioeconomic impact with the outcomes of its comprehensive analysis of several innovative SI policies and their welfare benefits. New or improved SI policies will result in wider societal implications for both the active and non-active working populations.