TY  - JOUR
AU  - Stiglitz,Joseph
AU  - Yun,Jungyoll
TI  - Integration of Unemployment Insurance with Retirement Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9199
PY  - 2002
Y2  - September 2002
UR  - http://www.nber.org/papers/w9199
L1  - http://www.nber.org/papers/w9199.pdf
N1  - Author contact info:
Joseph E. Stiglitz
Uris Hall, Columbia University
3022 Broadway, Room 814
New York, NY  10027
Tel: 212/854-0671
Fax: 212/662-8474
E-Mail: jes322@columbia.edu
AB  - This paper analyzes a social insurance system that integrates unemployment insurance with a pension program through an individual account, allowing workers to borrow against their future wage income to finance consumption during an unemployment episode and thus improving their search incentives while reducing risks. This paper identifies factors which determine the optimal degree of integration. A fully integrated system is one in which no reliance is placed at all on a separate tax-funded unemployment insurance program.  We show that when the   duration of unemployment is very short compared to the period of employment or retirement, the optimal system involves an exclusive reliance on pension-funded self-insurance.  This system imposes a negligible risk burden for workers while avoiding attenuating  search incentives. We also argue that a joint integration of several social insurance programs with a pension program through an individual account is desirable unless the risks are perfectly correlated to each other.
ER  -