This report presents an actuarial framework for examining the costs of unemployment compensation (UC) programs. The framework, derived in Section 1, emphasizes three factors: (1) the unemployment rate, (2) the recipiency rate (the share of the unemployed who collect UC benefits) and (3) the replacement rate (weekly benefits relative to weekly wages). Sections 2 and 3 examine replacement rates in 20 high income countries from the Organization for Economic Cooperation and Development (OECD). Section 2 examines empirical replacement rates while Section 3 compares the empirical estimates from Section 2 with estimates published by the OECD. The two estimates differ substantially, and analysis of the cause(s) of the differences is recommended.
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