Unemployment insurance and informality in developing countries
AbstractABSTRACT: We analyze whether the introduction of unemployment insurance (UI hereafter)benefits in developing countries would reduce the effort made by unemployed to secure a new job in the formal sector. We show that one shot UI benefits unambiguously increase the effort to secure a new job in the formal sector. The relative strength of income/substitution effects only determine how leisure and informal activities are affected. Consequently, our (partial equilibrium) analysis reveals that short term UI benefits in developing countries do not reduce incentives to securea new formal job and therefore cannot be interpreted as a subsidy to the informalsector.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by UNIVERSIDAD DEL ROSARIO in its series DOCUMENTOS DE TRABAJO with number 009015.
Date of creation: 03 Oct 2011
Date of revision:
Contact details of provider:
Unemployment insurance; informal sector; income effects; develop-ing countries.;
Other versions of this item:
- Bardey, David & Jaramillo, Fernando, 2011. "Unemployment insurance and informality in developing countries," TSE Working Papers 11-257, Toulouse School of Economics (TSE), revised Nov 2011.
- H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-DEV-2011-10-15 (Development)
- NEP-IAS-2011-10-15 (Insurance Economics)
- NEP-IUE-2011-10-15 (Informal & Underground Economics)
- NEP-LAB-2011-10-15 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fernando Álvarez-Parra & Juan M. Sanchez, 2009.
"Unemployment insurance with a hidden labor market,"
09-09, Federal Reserve Bank of Richmond.
- Raj Chetty, 2008. "Moral Hazard vs. Liquidity and Optimal Unemployment Insurance," NBER Working Papers 13967, National Bureau of Economic Research, Inc.
- Hopenhayn, H. & Nicolini, P.J., 1996.
"Optimal Unemployment Insurance,"
RCER Working Papers
421, University of Rochester - Center for Economic Research (RCER).
- Lars Ljungqvist & Thomas Sargent, 1999. "Matlab code for Hopenhayn-Nicolini's optimal unemployment insurance model," QM&RBC Codes 18, Quantitative Macroeconomics & Real Business Cycles.
- Cahuc, Pierre & Lehmann, Etienne, 1999. "Should unemployment benefits decrease with unemployment spell ?," CEPREMAP Working Papers (Couverture Orange) 9916, CEPREMAP.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Unemployment insurance in developing economies?
by Economic Logician in Economic Logic on 2011-11-01 14:49:00
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Publicaciones Economía).
If references are entirely missing, you can add them using this form.