Executive Summary

This paper examines Australia's scheme of unemployment protection and makes some comparisons with unemployment protection in the United States of America. A major concern of the paper is to understand the differences in unemployment duration between these two economies. Policies followed in the United States intended to reduce duration are reviewed for possible applicability in Australia. Because unemployment protection arrangements in the two countries are very different, the paper initially describes two broad systems: unemployment insurance (UI) and unemployment assistance (UA) as alternative ways to protect workers against the effects of unemployment. Australia operates a UA system of unemployment protection that limits eligibility to unemployed persons and families with low income. Its system of UA protection has existed for more than 50 years. The United States has operated unemployment insurance (UI) since the late 1930s. The paper focuses on two topics: costs and labor market disincentives. It presents a framework for assessing the costs of unemployment protections (Part III) and examines comparative cost data for selected countries (Part IV). The discussion of labor marke