The fact that a compulsory government program and not the private market provides unemployment insurance can be explained using the concepts of adverse selection and moral hazard.
Adverse selection refers to the fact that “workers who have the highest probability of becoming unemployed have the highest demand for unemployment insurance.” Adverse selection causes profit maximizing private insurance agencies to set high premiums for the insurance because there is a high likelihood they will have to make payments to the policyholder. High premiums work to exclude many individuals who otherwise might purchase the insurance. “A compulsory government program avoids the adverse selection problem. Hence, government provision of UI has the potential to increase efficiency. However, government provision does not eliminate moral hazard.”
“At the same time, those workers who managed to obtain insurance might experience more unemployment otherwise would have been the case.” The private insurance company would have to determine whether the employee is unemployed through no fault of their own, which is difficult to determine. Incorrect determinations could result in the payout of significant amounts for fraudulent claims or alternately failure to pay legitimate claims. This leads to the rationale that if government could solve either problem that government intervention would increase efficiency.
Unemployment insurance effect on unemployment
In the Great Recession, the “moral hazard” issue of whether unemployment insurance—and specifically extending benefits past the maximum 99 weeks—significantly encourages unemployment by discouraging workers from finding and taking jobs, has been expressed by Republican legislators. Conservative economist Robert Barro found that benefits raised the unemployment rate 2%. Disagreeing with Barro's study were Berkeley economist Jesse Rothstein, who found the “vast majority” of unemployment was due to “demand shocks” not “[unemployment insurance]-induced supply reductions.” A study by Rothstein of extensions of unemployment insurance to 99 weeks during the Great Recession to test the hypothesis that unemployment insurance discourages people from seeking jobs found the overall effect of UI on unemployment was to raise it by no more than one-tenth of one percent.
A November report by the Congressional Budget Office found that even if unemployment benefits convince some unemployed to ignore job openings, these openings were quickly filled by new entrants into the labor market. A survey of studies on unemployment insurances’s effect on employment by the Political Economy Research Institute found that unemployed who collected benefits did not find themselves out of work longer than those who didn’t have unemployment benefits; and that unemployed workers did not search for work more or reduce their wage expectations once their benefits ran out.
One concern over unemployment insurance increasing unemployment is based on experience rating benefit uses which can sometimes be imperfect. That is, the cost to the employer in increased taxes is less than the benefits that would be paid to the employee upon layoff. The firm in this instance believes that it is more cost effective to lay off the employee, causing more unemployment than under perfect experience rating.
An alternative to unemployment insurance intended to reduce the moral hazard costs would introduce mandated individual saving accounts for workers to draw on after being laid off. The plan, by Martin Feldstein would pay any positive account balance at retirement to the employee.
Effect on state budgets
Another issue with unemployment insurance relates to its effects on state budgets. During recessionary time periods, the number of unemployed rises and they begin to start drawing benefits from the program. The longer the recession lasts, depending on the state’s starting UI program balance, the quicker the state begins to run out of funds. The recession that began in December 2007 and ended in June 2009 has significantly impacted state budgets. According to The Council of State Governments, by March 18, 2011, 32 states plus the Virgin Islands had borrowed nearly $45.7 billion. The Labor Department estimates by the fourth quarter of 2013, as many as 40 states may need to borrow more than $90 billion to fund their unemployment programs and it will take a decade or more to pay off the debt.
Possible policy options for states to shore up the unemployment insurance funds include lowering benefits for recipients and/or raising taxes on businesses. Kentucky took the approach of raising taxes and lowering benefits to attempt to balance its unemployment insurance program. Starting in 2010, a claimant’s weekly benefits will decrease from 68% to 62% and the taxable wage base will increase from $8,000 to $12,000, over a ten-year period. These moves are estimated to save the state over $450 million.
Taxing or exempting benefits
The argument for taxation of social welfare benefits is that they result in a realized gain for a taxpayer. The argument against taxation is that the benefits are generally less than the federal poverty level.
Unemployment compensation has been taxable by the federal government since 1987. Code Section 85 deemed unemployment compensation included in gross income. Federal taxes are not withheld from unemployment compensation at the time of payment unless requested by the recipient using Form W-4V. In 2003, Rep. Philip English introduced legislation to repeal the taxation of unemployment compensation, but the legislation did not advance past committee. Most states with income tax consider unemployment compensation to be taxable. Prior to 1987, unemployment compensation amounts were excluded from federal gross income. For the US Federal tax year of 2009, as a result of the signing of the American Recovery and Reinvestment Act of 2009 signed by Barack Obama on February 17, 2009 the first $2,400 worth of unemployment income received during the 'tax year' of 2009 will be exempted from being considered as taxable income on the Federal level, when American taxpayers file their 2009 IRS tax return paperwork in early 2010.
Job sharing / short-time working
Job sharing or work sharing and short time or short-time working refer to situations or systems in which employees agree to or are forced to accept a reduction in working time and pay. These can be based on individual agreements or on government programs in many countries that try to prevent unemployment. In these, employers have the option of reducing work hours to part-time for many employees instead of laying off some of them and retaining only full-time workers. For example, employees in 18 states of the United States can then receive unemployment payments for the hours they are no longer working.
International Labour Convention
International Labour Organization has adopted the Employment Promotion and Protection against Unemployment Convention, 1988 for promotion of employment against unemployment and social security including unemployment benefit.
Lecture 1. Language and extralinguistic world
1. What are the basic elements of the relationship between a language and extralinguistic world?
To understand the role of translation in everyday life we have do define the relation of language to the extra linguistic world. Languages are sensitive to extralinguistic world. Each language is an embodiment of national spirit. Hence the differences in semantic structures of the languages and problems connected with rendering linguistic and cultural elements. The translator adapts his text according to the rules of usage, linguistic traditions, dominant strategies of presenting and processing information in the target language. The relation of language to the extra linguistic world includes 3 basic elements: language signs, mental concepts and denotata (not necessarily material or physically really existing).
The language sign is a sequence of sounds or symbols which is associated with a single concept in the minds of speakers of that or another language signs are a kind of construction elements of which a language is built.
The mental concept is an array of mental images and associations related to a particular part of the extralinguistic world, on the one hand, and connected with a particular language sign, on the other);
The denotatum is a part of the extra linguistic world which not necessarily material or physically really existing.
2. What is a language sign, a concept and a denotatum? Give definitions. Show the relation between them.
The language sign is a sequence of sounds (in spoken language) and symbols (in written language) which is associated with a mental concept in the minds of speakers of that or another language. Sequences smaller than a word as morphemes or bigger than a word as word combination are also language signs. Word combinations are regarded as individual language signs if they are related to a single mental concept which is different from the concepts of its individual components (best man, deep breathing).
The signs of language are associated with particular mental concept in the minds of the speakers of this language. For example, citizen is language sign related to the concept of a member of a state or an inhabitant of a city or town.
The mental concept is the array of mental images and associations related to the extra linguistic world, on the one hand, and connected with a particular language sign, on the other.
The relation between a language sign and a concept is ambiguous: it is often different even in the minds of different people, speaking the same language. The relation between similar concepts and their relevant language signs may be different in different languages. For example, citizen includes the concept of a member of a state that of townsman, but townsman doesn’t include.
The denotatum is a part of the extra linguistic world which is not necessarily material or physically really existing. It is an actual object referred to by a linguistic expression
The most important fact is that the relation between language signs and denotata is only indirect and going through the mental concepts.
3. What is a lexical meaning, a connotation and an association? Give definitions and examples.
The mental concept of a word usually consists of lexical meanings, connotations, associations and grammatically meanings. The lexical meanings, connotations, associations relate a word to the extra linguistic world, whereas the grammatically meanings relate it to the system of the language.
A lexical meaning is a general mental concept corresponding to a word or word combinations. To get a better idea of lexical meanings one should take a look at definition in a dictionary. For example, the lexical meanings of credit are respect, discount, faith, good reputation.
A connotation is an additional, contrastive value of the basic usually designative function of the lexical meanings. As an example, let me compare the words to get in trouble and to paint oneself into a corner. The former has no connotation, but the latter has a definite connotation of high-flown language.
An association is a more or less regular connection established between the given and other mental concepts in the minds of the language speakers. For instance, one may associate snail with snail's pace or with snail maze.
4. What is the range of application of a word? Give examples.
The range of application of the lexical meanings reflected in limitations in the word combinations and stylistic peculiarities. A translator is to observe the compatibility rules of the language signs (make mistake, but do business)
5. What are main sources of translation ambiguity stemming from the sign-concept relationship?
The most important fact be born in the mind of translator is that the relation between language signs and denotata is only indirect and going through the mental concepts. The relation between a language sign and a concept is ambiguous: it is often different even in the minds of different people, speaking the same language. The relation between similar concepts and their relevant language signs may be different in different languages. For example, citizen includes the concept of a member of a state that of townsman, but townsman doesn’t include. And this fact causes to the problem of translation ambiguity.
Another source of translation ambiguity is the polysemantic nature of the language signs: the relationship between the signs and concepts is very seldom one-to-one, most frequently it is one-to many or many-to-one i.e. one word has several meanings or several words have similar meanings. These relations are called polysemy (homonymy) and synonymy. For instance, sign corresponds to the concepts of something that indicates a fact; board; mathematics symbol; significant event.