AIAS Lunch Seminar 21 Jan. - Arjan Heyma (SEO Economic Research)

Consequences of full unemployment experience rating for labour demand and investments in human capital in the public sector

Arjan Heyma, SEO Economic Research

Abstract

Individual employers in the Dutch public sector fully bear the costs of unemployment benefits when they lay off their employees. The absence of a collective unemployment insurance fund in the public sector implies that experience rating amounts to 100 percent of total individual costs. Economic theory predicts that experience rating leads not only to a reduction in layoffs, but also in a reduction of hires, especially of job seekers with relative high expected costs of unemployment (i.e. unemployed, disabled, elderly). This study analyses the empirical relationship between full experience rating on the one hand and the number of layoffs and the number of hires of elderly, disabled and unemployed individuals on the other hand. In addition, this study looks at the variation in investments in human capital between sectors with and without (full) experience rating. It is concluded that full experience rating does in fact reduce the number of layoffs as well as the number of unemployed individuals hired. It also increases investments in training. With the exception of unemployed individuals, no further evidence is found that full experience rating reduces the number of hires in the public sector.

Day: Thursday 21 January 2010
Time: 12.15 – 13.15 hrs.
Location: AIAS, 3rd floor building M, Plantage Muidergracht 12
Register: Please send us an e-mail before 20 January, 12.00 hrs.
A sandwich will then be provided.

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