More on actual versus hypothetical replacement ratios in Ireland

Abstract

Hypothetical replacement ratios, widely used in both cross-section and time-series analyses, have been subjected to considerable criticism in the UK. This paper focuses on the use of hypothetical benefits and replacement ratios in a time-series context. A hypothetical Unemployment Benefit series, based on those used in a number of Irish studies, is compared with the average benefit actually paid out per claimant over time, published by the CSO but little used. This shows that the hypothetical benefits series tracks the changes in actual average benefits quite well, though it does significantly overstate the effects of introducing Pay-Related Benefit.