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  Unemployment Insurance
Felter, Megan, "Note: Short-Time Compensation: Is Germany’s Success with Kurzarbeit an Answer to U.S. Unemployment? ", Boston College International and Comparative Law Review v. 35 (Spring 2012) p. 481-510

The author argues the United States (U.S.) can learn from Germany’s success in using its work-sharing program to limit unemployment during recessions. During the 2008-2009 economic recession, German unemployment rate stayed constant, although rate in the United States increased doubled between 2008 and 2009. The author argues that Germany’s use of its Kurzarbeit work-sharing program helped prevent the loss of jobs during the economic recession. Under the program, employees whose hours are reduced due to temporary decreases in demand can receive government funds to supplement their diminished incomes. Although twenty-three states in the U.S. offer similar work-sharing programs, known in the United States as Short-Time Compensation (STC), these programs remain vastly underutilized for several reasons. First, legal ambiguity has stood in the way of the programs’ implementation. STC programs initially were created under the Tax Equity and Fiscal Responsibility Act (TEFRA), a program that expired in 1985. In 1992, Congress enacted the Unemployment Compensation Amendments of 1992 (UCA) in which it called upon the Department of Labor to create model legislation for STC programs. However, the Department of Labor has not done so, in part because UCA definitions of what constitutes an STC are inconsistent with TEFRA. In addition, most employers are unaware of the existence of STC programs. Currently only two percent of all unemployment claims involve STC claims. The author argues that that U.S. should pass legislation that reconciles the inconsistent legal definition of an STC programs, and should government actively promote STC programs to employers. Moreover, the author advocates that employers be required to continue health insurance and pension contributes while workers participate in STC programs. The author concludes that STC programs, under the right circumstances, can help combat unemployment in the U.S.

Subjects: Case Studies: Country-Specific, European Union, Flexibilization, Unemployment Insurance
Newsletter: Vol 12, Issue 4
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Kuhn, Peter & Riddell, Chris, "The Long-Term Effects of Unemployment Insurance: Evidence from New Brunswick and Maine 1940-1991", Industrial and Labor Relations Review v. 63 no2 (January 2010) p. 183-204

This article describes a study on unemployment insurance (UI) policies in the bordering regions of the Canadian province of New Brunswick and the United States’ state of Maine between 1940 and 1991. The two regions have similar ethnic makeup, population growth, and average income level but have divergent UI policies. New Brunswick’s UI system is federally-funded, and offered dramatically higher benefits than the US system during the sample period. The study looks to see if the differences in the programs results in different incidence of part-year work, defined as work of 1 to 39 weeks duration during a given year. It finds that in 1990, New Brunswick had 25.6% of working-age men working part year, compared to 12.6% in Maine, a difference that the authors find is largely attributable to the different UI policies. The authors conclude that generous UI programs can lead to greater participation in part-year work, but that its incentive pulls from both the highest (over 40 weeks) and lowest (0 weeks) brackets, resulting in only a modest effect on total labor supply.

Subjects: Comparative Labor Law, Labor Rights in General (Misc.), Unemployment Insurance
Newsletter: Vol 10, Issue 4
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