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Tory cuts

Does anyone have any good references on the relationship between the generosity of the benefit system and measures of unemployment?

I've just found this one:

This paper analyzes how a change in Slovenia’s unemployment insurance law affected the quality of jobs workers found after periods of unemployment. Taking advantage the “natural experiment” we show through difference-in-differences estimation results that reducing the potential duration of unemployment benefits had no detectable effect on wages, on the probability of securing a permanent rather than a temporary job, or
on the duration of the post-unemployment job.
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http://siteresources.worldbank.org/...2275364-1196182532901/UI_JobQuality_Final.pdf

ETA and this:

Generous unemployment benefits lie at the heart of the conventional explanation for persistent high unemployment. The effects of benefit generosity on work incentives are more ambiguous in a broader behavioural framework in which workers get substantial disutility from unemployment (given income) and know that unemployment has scarring effects in the future. The micro evidence suggests modest effects of changes in generosity, but there are reasons to doubt that the impacts on national unemployment rates are consequential. The empirical case for the orthodox prediction comes from cross-country regressions on the OECD's gross replacement rate (GRR), but the published evidence is mixed, and we find little support in the pattern of annual changes in the GRR and the unemployment rate for OECD countries over the last three decades. We take advantage of new and much improved net replacement indicators from the OECD, which show little correlation with either the GRRs or with unemployment and employment rates. We conclude that the available evidence does not offer compelling support for the conventional view.
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http://oxrep.oxfordjournals.org/content/25/1/60.abstract
 
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Lothian said:
Depends on the make up of the house.
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Okay. Let's break it down into various groups. Let's assume all medical care is provided by the state.

G1: A single man or woman.

G2: A single man or woman with 1 or more children.

G3: A couple with 1 or more children.

Presumably the first group would be expected to have the lowest guaranteed income. So how much should that be? £10,000pa? £25,000pa? Some percentage of mean or median income from those in work? Should factors such as the local cost of living be included?
 
Undesired Walrus said:
Can someone explain what is going to happen with Housing Benefit?
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no, as the final decisions within DWP/ HMT have not yet (officially) been taken. Even if they have unofficially been taken they will still be subject to cabinet and possibly parliamentary scrutiny.

What's the cut-off going to be?
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we may find out post CSR (20 oct) or may have to wait until the local government settlement is announced a week or so afterwards.
 
Ivor the Engineer said:
Okay. Let's break it down into various groups. Let's assume all medical care is provided by the state.

G1: A single man or woman.

G2: A single man or woman with 1 or more children.

G3: A couple with 1 or more children.

Presumably the first group would be expected to have the lowest guaranteed income. So how much should that be? £10,000pa? £25,000pa? Some percentage of mean or median income from those in work? Should factors such as the local cost of living be included?
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Without thinking too hard (and possibly with little knowledge of the cost of living) I would say

G1 £4520
G2 £7941
G3 £12432

Basically 1/2 the minimum wage (35 hours a week) + 75% of that per sprog. Happy for the fraction, hours and percentages to be adjusted according to evidence but the basic formula seems reasonable and future proof.
 
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From the link provided by Prof. Yaffle:

We find that shortening the duration of benefits did not affect the quality of postunemployment job matches. None of the quality indicators was negatively affected by the reform: the pre-reform wage increases in new jobs stayed unchanged, as did the duration of the newly found jobs and the distribution between fixed-term and permanent jobs. These findings are particularly important combined with the findings of our companion paper (Van Ours and Vodopivec, 2006a), which showed that the same benefit reform strongly shortened the spell of beneficiaries’ unemployment. Taken together, the results show that once the potential duration of benefits was shortened, benefit recipients found a job more quickly with no loss in the quality of the post-unemployment job match – an indication that reducing benefits reduced the moral hazard created by unemployment insurance.
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Not surprising.
 
Lothian said:
Without thinking too hard (and possibly with little knowledge of the cost of living) I would say

G1 £4520
G2 £7941
G3 £12432

Basically 1/2 the minimum wage + 75% of that per sprog.
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Okay. Tax those in work (via income tax) so that every group is guaranteed those amounts of income whether they are in work or not.

What are the problems with such a system and how might they be mitigated?
 
Ivor the Engineer said:
Okay. Tax those in work (via income tax) so that every group is guaranteed those amounts of income whether they are in work or not.

What are the problems with such a system and how might they be mitigated?
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Why only those in work - we have plenty of idle rich in this country, why shouldn't they contribute to society?
 
Ivor the Engineer said:
Okay. Tax those in work (via income tax) so that every group is guaranteed those amounts of income whether they are in work or not.
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No, those are the rates for those that don't work. Those that work would get more. For every hour they work they get at least the mimimum wage less tax and an appropirate reduction in benifits.

ie.
minimum wage 35 hours a week around £7200pa
purely Benifits £4520pa
Some pro rata for those working part time.


What are the problems with such a system and how might they be mitigated?
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It is simplistic. It can be mitigated by complication.

I thought you wanted rough figures not a comprehensive bill,
 
Lothian said:
No, those are the rates for those that don't work. Those that work would get more. For every hour they work they get at least the mimimum wage less tax and an appropirate reduction in benifits.

ie.
minimum wage 35 hours a week around £7200pa
purely Benifits £4520pa
Some pro rata for those working part time.
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I'd make it even simpler than that: Make it a universal benefit. If people think they don't need to claim it, they can opt-out until they do.

It is simplistic. It can be mitigated by complication.

I thought you wanted rough figures not a comprehensive bill,
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Why is it being simplistic a problem? Sometimes simple solutions are near-optimal (or more precisely, close to the best that can be achieved in reality).
 
Lothian said:
Fairness. Should the unemployed rich get it?
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If you notice my response to Darat's concern that only those in work pay for it, I suggested it be funded by a income tax. Presumably the unemployed rich are getting an income from somewhere, so they are paying tax (probably quite a lot of tax if it's made progressive) to fund the scheme.

Stay at home wives?
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Why's it unfair for partners of taxpayers to receive a minimum income from the state?
 
Ivor the Engineer said:
If you notice my response to Darat's concern that only those in work pay for it, I suggested it be funded by a income tax. Presumably the unemployed rich are getting an income from somewhere, so they are paying tax (probably quite a lot of tax if it's made progressive) to fund the scheme.
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Not at the moment. There is no 'wealth' tax.

Why's it unfair for partners of taxpayers to receive a minimum income from the state?
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Becuase they have made a legal agreement to be taxed\recieve benefits as if they were one.
 
Lothian said:
Not at the moment. There is no 'wealth' tax.
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True. But presumably they are earning interest on savings or receiving dividends from shares which could be considered income and taxed accordingly.

Becuase they have made a legal agreement to be taxed\recieve benefits as if they were one.
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Everyone is still treated as an individual, but their benefit status is changed depending on their circumstances. E.g., each partner of a married couple with a child would (be entitled to) personally receive half the benefit for such a household.
 
Darat said:
As long as the current system that allows the richer to avoid (and evade) tax are sorted out. (For example Ashcroft's latest avoidance measures.)
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Absolutely. Simplifying the tax system would make enforcing it much easier.
 
Lothian said:
Without thinking too hard (and possibly with little knowledge of the cost of living) I would say

G1 £4520
G2 £7941
G3 £12432

Basically 1/2 the minimum wage (35 hours a week) + 75% of that per sprog. Happy for the fraction, hours and percentages to be adjusted according to evidence but the basic formula seems reasonable and future proof.
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This assumes that the minimum wage is at a reasonable level, surely?

You seem to be suggesting that a single person should survive on £86 per week. Is that correct? Is that after housing costs?
 
Fiona said:
This assumes that the minimum wage is at a reasonable level, surely?
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Yes

You seem to be suggesting that a single person should survive on £86 per week. Is that correct? Is that after housing costs?
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Yes, that is for everything although I did say it was the linking to the minimum wage as opposed the amounts that were important.

I don't think we should pay for all single people to live in a house on their own. They should have enough to pay for a room.
 
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