Inefficient, the French unemployment insurance system promotes job instability and helps maintain high unemployment. This summary shows that there is significant leeway to improve our system of unemployment insurance. Read More
The objective of unemployment insurance is to compensate for periods of unemployment in the best fashion possible, while limiting the length of these periods.
Far from fulfilling this objective, the French system promotes large-scale redistribution across activity sectors and salary levels. Due to its limited effectiveness, this system favours job instability and helps to maintain high levels of unemployment.
However, significant leeway exists to limit these transfers and the optimising behaviours that they promote. The system must be refocused on individual incentives for job retention and the return to employment. In addition, it must be steered more coherently by better coordinating insurance and assistance for job seekers.
Pierre Cahuc is the director of the macroeconomics laboratory at CREST-ENSAE and a professor at the École polytechnique.
Stéphane Carcillo is an affiliated professor in the department of economics at Sciences Po.