Unemployment Benefit Systems in Central and Eastern Europe: A Review of the 1990s

The paper provides an overview of unemployment benefit systems in Central and Eastern Europe during the 1990s. It describes their institutional features (eligibility, the level and duration of benefits, and special rules), discusses issues arising in their implementation, and examines their performance. Income protection effects, derived from the empirical analysis of household income and expenditures surveys, pertain to the coverage, the average size of benefits in household income, and the targeting of benefits. Efficiency effects, obtained from a literature review, are related to the effects of benefits on the duration of unemployment spell, restructuring, and overall unemployment and employment rates. The evidence shows that (i) unemployment benefits were progressive; (ii) that, in countries with broad coverage and sizeable share of benefits in household incomes, they strongly reduced poverty; and (iii) that, similar to findings for developed economies, they created work disincentives.