Is there a risk in a system of voluntary unemployment insurance that people with a high risk of becoming unemployed to a greater extent become members?


Arash Nekoei and Peter Nilsson

The researchers behind a study, which by analyzing the selection in today's unemployment insurance answers that question, are now awarded the Swedish Unemployment Insurance Fund's (Sveriges A-kassor) research prize for 2021. The prize of SEK 75,000 will be awarded in connection with a seminar in Stockholm on 25 November.

The researchers behind the study "Risk-Based Selection in Unemployment Insurance: Evidence and Implications" are IIES' Arash Nekoei and Peter Nilsson, with IIES alumnus David Seim (now Professor of Economics at the Department of Economics at Stockholm Univeristy), Camille Landais and Johannes Spinnewijn (both at London School of Economics). In their study, they examine a key issue for the design of unemployment insurance, ie whether the insurance should be compulsory or not.

With a voluntary insurance, there is a risk that only people with a high risk of becoming unemployed will join. If the selection in this way proves to be unfavorable, it could be a motive for making the insurance compulsory.

In an innovative analysis, where the research group combines theory and empirical data, they show that the problem of negative selection in the Swedish unemployment insurance is not very large. The conclusion is that there are no arguments for making unemployment insurance compulsory.

Click here for more information (in Swedish) on the Sveriges A-kassor website.

Contacts at the IIES:

Arash Nekoei

Peter Nilsson