ADJUSTING UNEMPLOYMENT BENEFITS TO THE ECONOMIC CYCLE

Abstract

As a socio-economic phenomenon, unemployment is intrinsic to any market economy. Unemployment benefits provide incomes to individuals who have lost their jobs and the possibility of bearing the severity of risk collectively. The generosity of unemployment benefits may affect the incentives for searching and accepting a job, as well as the duration of unemployment. They could therefore act as an inbuilt economic stabiliser which is adjusted to a particular economic cycle. The article aims to identify potential pros and cons and examine the extent to which unemployment benefits in Europe and Bulgaria successfully act as inbuilt automatic stabilisers.