Sunday, April 12, 2009

Unemployment Benefits

Peter Martin provides this graph comparing unemployment benefits to the single pension, from the Australia Institute's submission to the Henry Review.

The Unemployment benefit is indexed to CPI; the pension is inedexed to faster-growing wages....

Already Australians on disability pensions (already far too many) are afraid to look for work because if it doesn't work out they are cactus.

A further interesting point in relation to this graph is that, as we have seen in Australia and the United States, relatively low unemployment benefits limit the effectiveness of automatic stabilisers and require larger discretionary adjustments in fiscal policy during times of economic contraction.

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