A Closer Look

Unemployment insurance subsidizes layoffs writes Mulligan. As life insurance subsidizes death?

“Unemployment insurance and other types of social insurance subsidize job separations and thereby result in too many layoffs and too few people employed” writes Casey B. Mulligan in Social Insurance and Layoffs on NYTimes.com.

“A variety of programs help workers after they leave a job and do not start a new one, depending on the circumstances of the job separation.

“Unemployment insurance is often available when the worker was laid off and continues to look for work. Disability insurance is available when a worker’s health makes it too difficult to remain on the job. Social Security’s old-age insurance program provides income for elderly people after they leave their jobs.

“Layoffs, disability events and retirements have some differences, of course, which is why each type of job separation has a separate insurance program. But in each case, a working relationship between an employer and an employee has been terminated, and the worker has not started a new one with, say, different working conditions or a different rate of pay.

“In their analyses of disability and old-age insurance, economists have found that insurance reduces the cost of job separations and thereby increases their numbers, because the insurance helps replace the income and production that is lost when the worker stops working.”

Well, would you say that life insurance subsidizes death?

via Casey B. Mulligan: Social Insurance and Layoffs – NYTimes.com.

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