infonet-economy

Many studies have found that countries with union-administered unemployment insurance have higher rates of unionization than countries with state-administered unemployment insurance. With data going further back in history, this paper demonstrates that the introduction of so-called “Ghent systems” had no effect on unionization rates. We argue that the Ghent effect identified by the existing literature came about as a result of increasing state subsidization and benefit generosity in the 1950s and 1960s. Exploring the partisan politics partisan politics of unemployment insurance, we show that progressive Liberals (“Social Liberals”) favored Ghent designs while Social Democrats favored state-administered unemployment insurance before the Second World War. We also present some evidence suggesting that Left governments, inheriting Ghent systems that were not of their choosing, promoted state subsidization in the postwar era and thus helped generate the Ghent effect identified by the existing literature.