Who fills the income protection gap? : An empirical analysis of the development of complementary unemployment insurance in Sweden  

Abstract: The Swedish welfare state is often conceived as a universal and encompassing welfare state. However, research has shown significant contractions of coverage and benefit levels in several Swedish welfare programs in the last 20 years. One such program is the unemployment insurance. The development has led to occupational insurance through collective agreements and income insurance provided through the unions to become increasingly important for individuals’ income protection in times of unemployment. While previous research has tended to focus on the public welfare provision of unemployment insurance, this thesis seeks to make an empirical and methodological contribution to the study of social policy by investigating the development of complementary unemployment insurance plans and the potential differences it creates in the level and affordability of income protection for different groups of workers. The study is conducted by modeling a set of stylized workers facing different income levels and risk of unemployment to calculate the degree to which the different insurance plans replace former income and the cost of that income protection. The analysis shows that the development of complementary insurance plans has led to differences in the level of income protection due to declining generosity of the public system, which in recent years, however, has to some extent been restored. Moreover, the result suggests that unemployment risk becomes an important factor for the level of income protection and the cost of insurance, especially for workers with lower wage levels with similar risks and for longer durations of unemployment.