Roberto Leombruni (University of Torino and LABOR)

“For a Fistful of Euros. Tales of Ordinary unemployment”

abstract

In most developed countries the insurance against involuntary unemployment is a pivotal policy in the support of workers. In Italy, it has just a marginal role; furthermore, it is currently questioned for the very low coverage it grants to its target population. In this paper we show that the weaknesses and inconsistencies in the design of Ordinary Unemployment Benefit (oub) – the main unemployment insurance measure in Italy – are even more serious. Exploiting an original database tracing the transitions in and out of the measure we are able to show that just in half of the cases the benefit is taken in a situation of frictional unemployment. The other half is absorbed by seasonal work, “permanently precarious” work in the public sector and in the management of temporary layoffs. In the latter case, oub is used as a substitute for the measure specifically devoted to temporary layoffs (the “Cassa Integrazione Guadagni”, cig) when the condition to use CIG are not met – hampering this way the effectiveness of those conditions. Furthermore, it comes out that a large share of individuals eligible for oub do opt for a competing measure nearly equivalent in the benefit amount and duration, eluding the job search conditionality requested for oub recipiency – again, neutralizing its effectiveness.

With a simple accounting micro-simulation we show how the documented (mis)uses of oub do imply a structural imbalance between contributions and benefits across different categories of workers, which raises both equity and financial sustainability issues.