In this paper we consider how the presence of private information may explain the failure of the private sector to provide unemployment insurance. In particular, we show how the interaction of private information regarding employees' preferences for work with the unobservable level of effort exerted on the job may explain the absence of private unemployment insurance. We also reflect on the implications of our findings for the role of the public sector in providing unemployment insurance.

This paper examines legal rules covering protection of corporate shareholders and creditors, the origin of these rules, and the quality of their enforcement in 49 countries. The results show that common‐law countries generally have the strongest, and frenchcivillaw countries the weakest, legal protections of investors, with German‐and scandinavin‐civil‐law countries located in the middle. We also find that concentration of ownership of shares in the largest public companies is negativelyrelated to investor protections, consistent with the hypothesis that small, diversified share‐holders are unlikely to be important in countries that fail to protect their rights.