Abstract
The regulation of unemployment insurance（UI） has been revised in 2001. Under the new regulation, workers are more likely to receive benefits more than once. Thus, the purpose of this study is to consider the re-employment structure, and combine insurance pricing model and unemployment duration model to establish a two-period model for calculating the fair premium rate of UI. Survival analysis is used to estimate the average duration of receiving UI benefits. Because workers may receive multiple times of benefits, we also set another distribution to describe the re-employment duration. Our results suggest that the fair rate of premium for UI is 3.04875%, which is higher than statutory standard 1%. This analysis also update the parameters of the Weibull distribution of unemployment duration by simulating the distribution based on the data from the 2000 and 2001 Manpower Utilization Survey. In addition, we also consider re-employment in our pricing model and therefore add another two parameters：scale parameter and shape parameter of employment duration distribution. The simulation results imply that risk-free interest rate in capital market, possibility of application and probability of approval are the main factors that have strong influence on the fair rate of premium. Further consideration of workers’ characteristics in the process of calculating expenditure of UI benefits, the fair rate of premium for UI is 3.10478％, which is even higher than the results above. Unlike the simulation results mentioned earlier, the fair rate of premium is more sensitive to the employment duration distribution’s scale parameter and shape parameter which affect unemployment possibility, especially for the age group of 15-24.