Linking Jobseeker's Benefit to previous earnings for those have recently become unemployed does pose a coherent economic case, new research from the Economic and Social Research Institute (ESRI) has found.
But the study also claims that doing so would give rise to a non-trivial cost and weaker financial incentives to work.
The Programme for Government suggests that such a link could be considered.
According to the institute, Ireland is one of the few countries in the EU without a strong relationship between unemployment benefit payments and the previous earnings of those claiming it.
The paper says linking the two would provide a better "short-term cushion" for those made unemployed.
"The linkage of unemployment payments to previous earnings could provide greater insurance for those who lose their job but requires non-trivial additional spending and worsens financial incentives to work," said Theano Kakoulidou, one of the authors of the report.
"Maximum payment caps are needed so that the benefits from the reform are distributed in a more equitable manner."
The research also states that when it comes to Maternity Benefit there is a strong case for making it related to current pay as it helps reduce the gender wage gap.
It says there is a similar argument backed up by international evidence to be made for Illness Benefit, as it can generate public health benefits.
But the ESRI also says there would be a cost to doing this.
If, for example, the rate of Jobseeker's Benefit was set at equal to 60% of previous earnings, with the maximum payment per week capped at €350 per week it would cost an estimated €280 million more per year.
While keeping income replacement rate at 60% but increasing the maximum payment per week to 60% of the average weekly income, giving an effective cap of €460 per week, would cost an estimated €590 million per year.
The paper was presented as part of the ESRI's annual Budget Perspectives conference, taking place today.
