The Pros And Cons Of Social Insurance Programs

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One of the arguments for the implementation of social insurance programs is that the government will be able to provide some sort of safety net for citizens in the event of sudden unemployment, disability, or injury. Gruber (2013), on the other hand, proposes the idea of “social savings accounts” whereby citizens would be able to make contributions to their own fund, eliminating the need for social insurance programs such as workers’ compensation, unemployment and disability insurance. While Gruber’s social savings accounts idea is certainly plausible, his idea could have serious repercussions for a majority of recipients of these social insurance programs. For this reason, it is important to consider the pros and cons of his proposal, keeping in mind the interests of citizens and if Gruber’s idea is in fact, feasible. …show more content…

Gruber (2013) finds support for reduced moral hazard in the absence of social insurance programs (414). Social savings accounts then, encourage citizens to assume responsibility and take a more proactive role in managing their consumption while unemployed, disabled, or injured. For example, the lack of a safety net and the impending realization one will have to use one’s own savings accounts will motivate unemployed citizens to actively seek and return to work faster. This would especially hold true in absence of worker’s compensation, where individuals would no longer be paid for lost wages. Additionally, some will argue that in the case of unemployment insurance, pressure and time constraints will lead to inefficient job matches; however, unemployment benefits do not necessarily lead to better job matches (Gruber

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