Unemployment Insurance, Job Search, and Informal Employment
AbstractThis paper analyses the potential impacts of introducing unemployment insurance (UI) in middle income countries using the case of Malaysia, which today does not have such a system. The analysis is based on a job search model with unemployment and three employment sectors: formal and informal wage employment, and self employment. The parameters of the model are estimated to replicate the structure of the labor market in Malaysia in 2009 and the distribution of earnings for informal, formal and self employed workers. The results suggest that unemployment insurance would have only a modest negative effect on unemployment if benefits are not overly generous. The main effect would be a reallocation of labor from wage into self employment while increasing average wages in the formal and informal sectors.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00714372.
Date of creation: Jul 2014
Date of revision:
Publication status: Published, Social Insurance, Informality, and Labor Markets How to Protect Workers While Creating Good Jobs, Oxford University Press (Ed.), 2014, à paraître
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Unemployment insurance; Informal sector; Self employment; Job search;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-06-02 (All new papers)
- NEP-IAS-2014-06-02 (Insurance Economics)
- NEP-IUE-2014-06-02 (Informal & Underground Economics)
- NEP-SEA-2014-06-02 (South East Asia)
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