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Incentive effects of unemployment insurance savings accounts: Evidence from Chile

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  • Hartley, Gonzalo Reyes
  • van Ours, Jan C.
  • Vodopivec, Milan

Abstract

The paper, the first one to empirically examine whether individual accounts internalize the cost of unemployment, estimates the determinants of job finding rates of unemployment benefit recipients under the Chilean program. This is a unique, innovative program that combines social insurance, provided via solidarity funding, with self-insurance in the form of unemployment insurance savings accounts (UISAs). The paper shows that beneficiaries who use solidarity funding are less likely to exit unemployment in early months than those relying on UISAs only. Moreover, job finding rates are found to be positively correlated with pre-separation UISA balances among those that use solidarity funding, but are found to be uncorrelated with balances for those relying on UISAs only. While the findings are consistent with the effects expected under the internalization of unemployment costs via UISAs, they do not pinpoint unambiguously the causal link, as alternative mechanisms may be responsible for the observed correlations, particularly selection into the use of UISAs.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 18 (2011)
Issue (Month): 6 ()
Pages: 798-809

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Handle: RePEc:eee:labeco:v:18:y:2011:i:6:p:798-809

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Web page: http://www.elsevier.com/locate/labeco

Related research

Keywords: Unemployment insurance; Unemployment duration; Savings accounts;

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References

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  1. Martin Feldstein & Daniel Altman, 1998. "Unemployment Insurance Savings Accounts," NBER Working Papers 6860, National Bureau of Economic Research, Inc.
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  14. Joseph Stiglitz & Jungyoll Yun, 2002. "Integration of unemployment insurance with retirement insurance," Discussion Papers 0203-04, Columbia University, Department of Economics.
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Citations

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Cited by:
  1. Amil Petrin & Jagadeesh Sivadasan, 2013. "Estimating Lost Output from Allocative Inefficiency, with an Application to Chile and Firing Costs," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 286-301, March.
  2. Ferrer, Ana & Riddell, W. Craig, 2011. "Unemployment Insurance Savings Accounts in Latin America: Overview and Assessment," IZA Discussion Papers 5577, Institute for the Study of Labor (IZA).
  3. Robalino, David A. & Vodopivec, Milan & Bodor, András, 2009. "Savings for Unemployment in Good or Bad Times: Options for Developing Countries," IZA Discussion Papers 4516, Institute for the Study of Labor (IZA).
  4. Fisher, Walter H. & Keuschnigg, Christian, 2011. "Life-Cycle Unemployment, Retirement, and Parametric Pension Reform," Economics Series 267, Institute for Advanced Studies.
  5. Tatsiramos, K. & Ours, J.C. van, 2012. "Labor Market Effects of Unemployment Insurance Design," Discussion Paper 2012-082, Tilburg University, Center for Economic Research.
  6. Cristobal Huneeus & Silvia Leiva & Alejandro Micco, 2012. "Unemployment Insurance and Search Effort in Chile," Research Department Publications 4784, Inter-American Development Bank, Research Department.
  7. Haroon Bhorat & Sumayya Goga & David Tseng, 2013. "Unemployment Insurance in South Africa: A Descriptive Overview of Claimants and Claims," Working Papers 13160, University of Cape Town, Development Policy Research Unit.
  8. Holzmann, Robert & Pouget, Yann & Vodopivec, Milan & Weber, Michael, 2011. "Severance pay programs around the world : history, rationale, status, and reforms," Social Protection Discussion Papers 62726, The World Bank.
  9. Isabel Poblete, 2011. "Análisis del uso de beneficios en el Seguro de Cesantía Chileno," Working Papers 51, Superintendencia de Pensiones, revised Oct 2011.
  10. Eduardo Fajnzylber R. & Isabel Poblete H., 2013. "Analysis of the use of benefits under Chilean unemployment insurance," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 16(3), pages 32-68, December.
  11. Paula Nagler, 2013. "How unemployment insurance savings accounts affect employment duration: evidence from Chile," IZA Journal of Labor & Development, Springer, vol. 2(1), pages 1-25, December.
  12. Vodopivec, Milan, 2009. "Introducing Unemployment Insurance to Developing Countries," IZA Policy Papers 6, Institute for the Study of Labor (IZA).
  13. Nagler, Paula, 2013. "How unemployment insurance savings accounts affect employment duration: Evidence from Chile," MERIT Working Papers 039, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  14. Fernando Alexandre & Luís Aguiar Conraria & Pedro Bação & Miguel Portela, 2011. "A Poupança em Portugal," GEMF Working Papers 2011-19, GEMF - Faculdade de Economia, Universidade de Coimbra.

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