erc/metu
INTERNATIONAL CONFERENCE IN ECONOMICS  IV
September 13-16, 2000, Ankara

Actuarial Modeling of the Turkish Unemployment Insurance System

Mustafa Akmaz (Treasury)

Abstract

This paper describes the fundamental features of the unemployment insurance system in Turkey. A deterministic actuarial model was developed to simulate the system in question and the assumptions and inputs of the model were updated based on SSK and SIS’ data.

This study aims at measuring the medium and long-term financial viability of the unemployment system and creating a decision tool for policy makers to help them form their policies. In this respect, the projections were carried out for a twenty-year period, which is long enough.

A Base Case Scenario which exactly simulates the system was designed and several scenarios which propose some parametric changes were also projected. Fund’s total value/GNP ratio was used as a performance measure and to compare the Scenarios.

The probability of being unemployed, real rate of investment returns for the Fund, the beta coefficient for occupational development programs and job finding, and contribution rate are the most important parameters, to which the system is quite sensitive. Furthermore, contribution collection rate, unemployment benefit ceiling, replacement rate, average duration of benefits and the number of consecutive months of full contribution are found to be the other significant parameters within the system. Stochastic modelling of the system is the future study topic proposed.

Economic Research Center
Middle East Technical University
06531 Ankara Turkey
Phone: + 90 312 210 3044, 210 2003
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e-mail: metuerc@metu.edu.tr