Economic Human Rights (35): A Right to Unemployment Insurance?

Article 23 of the Universal Declaration of Human Rights provides a right to work, as well as a right to “free choice of employment and to just and favorable conditions of work”. That right protects us against slavery, forced labor, unfair wages, and unsafe working conditions. The same article offers a right “to protection against unemployment”. That clause can be interpreted in two ways:

  • it can mean that if we’re out of work through no choice of our own, we should get help to find work (either from the state or from our fellow citizens)
  • or it can mean that if we’re involuntarily unemployed, we should get some monetary compensation for the loss of salary or income and the financial stress that we suffer as a result.

It’s the latter interpretation that is made more explicit in another article, number 25, of the Declaration which mentions “the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control”.

So it seems we have a right to unemployment insurance or unemployment benefits. The obvious justification for this right is material wellbeing: the absence of poverty is also a right.

However, there are some other types of justification of unemployment insurance. Some call UI an “automatic stabilizer” in times of economic hardship: Keynes taught us that both unemployment and falling wages lower consumer demand and can lead to even greater unemployment. Stingy or absent unemployment benefits lower demand even more. In that view, which does sound plausible, unemployment insurance isn’t just a good in itself and for the individuals concerned (as well as for those who may someday suffer unemployment and who can suffer some amount of stress because of the risk), but is necessary for the periodic regeneration of capitalism and for the smoothing of the business cycle. Benefits are also efficiency enhancing because of another reason:

One of the possible advantages that is touted for more generous UI (including by Mike Konczal) is the idea that it allows for better job matching—people can wait to find the right long-term job opportunity instead of taking the first job that becomes available. (source)

It’s better to have people perform the jobs they prefer because they’re likely to be most efficient there. Hence, it’s better to give them more time to find the right job, and to give them unemployment benefits so that they have the time.

Others, however, call this right a foolish invention because it destroys incentives to work at the level of individuals, and reduces incentives to create wealth at the level of companies (because of the relatively high tax rates that come with the welfare state, that in turn comes with benefits such as unemployment insurance). It doesn’t enhance efficiency at all, on the contrary. But the evidence for this view is not so strong:

Evidence suggests that individuals do prolong their job search when they receive unemployment benefits, partly because they are looking for the best possible job. But the magnitude of this effect is likely to be small.

A recent study … compared lengths of unemployment among those eligible for unemployment insurance with those who were not eligible. Their statistical analysis suggests that extended benefits accounted for only four-tenths of 1 percentage point of the nearly 6 percentage point increase in the national unemployment rate over the last few years. (source)

Still others call the right to unemployment benefits a foolish invention, not because of reasons that have to do with overall economic efficiency, but because they believe that the unemployed have no one else to blame but themselves for their misfortune, and therefore can’t demand help from others. Those others can voluntarily decide to help the unemployed, in a spirit of charity that extends even to self-inflicted misfortune, but the unemployed don’t have a right based on moral concerns to demand such help. And indeed, there may be some logic to such a view: if we all believe strongly that we deserve what happens to us, we are likely to work hard, show discipline and self-control and hence achieve success. Conversely, those who think that the causes of their misfortune are always outside of their control, are not likely to invest much effort in their lives. However, morality and life are much more complicated than that. The best efforts can lead to disaster, and apathy can lead to success. People who are not the sole authors of their success can be required to help those who are not the sole authors of their misfortune.

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