J65 - Unemployment Insurance; Severance Pay; Plant ClosingsReturn

The article deals with the German obligatory unemployment insurance (so-called AVAVG, enacted in 1927) in the interwar period. This scheme replaced an older system, introduced in 1918, based on monetary provisions distributed under means-tests and financed from taxes. The prospective unemployment rate was underestimated. Because of this fact the insurance scheme had the serious trouble of showing a deficit. Financing became an important issue in the political struggle among political parties, and governments were not able to enforce any fundamental curative reform of this scheme before 1933.