Topic summary
Unemployment insurance
Extracted from the Wikipedia article Unemployment benefits.
Self-employment and employment rates
Unemployment insurance has varying effects on employment and self-employment rates. As self-employment is generally not covered, an increase in UI generosity creates greater disincentives for self-employment, which leads to a positive correlation between UI generosity and the transition from self-employment to paid-employment. Conversely, individuals already in paid-employment experience the opposite trend. This reallocation from self-employment to paid-employment may have a positive effect on the employment rate in the economy but may have a strong negative effect on self-employment rates. It has also been shown that allowing self-employed individuals to access unemployment insurance might lead to a boost in self-employment activity.