ABSTRACT
In this chapter, the authors concentrate on ‘built-in’ stability and their main effort towards making an (rough)evaluation of the ‘built-in’ stabilising effectiveness of the British scheme of Unemployment Insurance in the post-war period. They consider Unemployment Insurance as a weapon of discretionary stabilisation policy. In total the ‘short-lag’ assumption is very little more realistic for unemployment benefits than for any rise in government expenditure. The change in the inflow to and outflow from the national insurance fund which results from an increase in unemployment by one worker are the total of the worker’s and employer’s contributions and the benefit received by the worker respectively. The expenditure impact of most adjustments in the Unemployment Insurance scheme will be primarily on consumption expenditure. Greater reliance might be placed in the future on the central bank as the ‘investing’ and ‘financing’ agency for the funds of the Unemployment Insurance scheme.
