Preferences for unemployment insurance and labor-market risks: over-time developments in Germany and the United States

Abstract

This article examines the relationship between labor-market risks and demand for social insurance. It looks at the over-time variations in preferences for unemployment insurance in Germany and the United States, and delineates the links with these and one's position in the labor market. The results suggest that rather than the type of human capital investment, occupational unemployment rate is explanatory for the demand for social insurance, along with income. Our analysis challenges the widespread association, in the literature, between higher specificity and higher social spending.