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How unemployment insurance savings accounts affect employment duration: Evidence from Chile

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  • Nagler, Paula

    ()
    (UNU-MERIT / MGSoG)

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    Abstract

    The introduction of unemployment insurance savings accounts (UISA) in Chile in October 2002 brought in more comprehensive unemployment protection while decreasing the opportunity costs of job change. Being the first to empirically investigate the effect of UISA on employment duration, this paper examines (i) whether the introduction of UISA affected employment duration among formal private sector workers, and (ii) the magnitude of this effect. The analysis is performed on longitudinal social protection data and uses survival analysis techniques, including non-parametric, semi-parametric and parametric analysis, and competing-risk models. The paper finds that workers participating in the scheme show an increased hazard ratio of leaving employment, or accelerated time to employment termination. The effect is larger for workers becoming unemployed or inactive compared to workers changing jobs. The results provide strong support that the introduction of UISA led to shorter employment duration and higher mobility of the workforce in Chile.

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    File URL: http://www.merit.unu.edu/publications/wppdf/2013/wp2013-039.pdf
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    Bibliographic Info

    Paper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 039.

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    Date of creation: 2013
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    Handle: RePEc:unm:unumer:2013039

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    Keywords: Unemployment Insurance Savings Accounts; Employment Duration; Survival Analysis; Chile;

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    1. Adriana D. Kugler, 2001. "From severance pay to self-insurance: Effects of severance payments savings accounts in Colombia," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 592, Department of Economics and Business, Universitat Pompeu Fabra.
    2. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications, Inter-American Development Bank, Research Department 4227, Inter-American Development Bank, Research Department.
    3. Folster, Stefan, 1999. "Social Insurance Based on Personal Savings," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 75(228), pages 5-18, March.
    4. Vodopivec, Milan, 2009. "Introducing unemployment insurance to developing countries," Social Protection Discussion Papers 49170, The World Bank.
    5. 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.
    6. Reyes, Gonzalo & van Ours, Jan C. & Vodopivec, Milan, 2010. "Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7632, C.E.P.R. Discussion Papers.
    7. Milan Vodopivec, 2010. "How Viable are Unemployment Insurance Savings Accounts? Simulation Results for Slovenia," Comparative Economic Studies, Palgrave Macmillan, vol. 52(2), pages 225-247, June.
    8. Solange Berstein & Carmen Contreras & Evelyn Benvin, 2008. "Valoración del Seguro de Cesantía en Chile: Simulación de Beneficios con Datos Individuales," Working Papers, Superintendencia de Pensiones 27, Superintendencia de Pensiones, revised Dec 2008.
    9. Gomez-Salvador, Ramon & Messina, Julian & Vallanti, Giovanna, 2004. "Gross job flows and institutions in Europe," Labour Economics, Elsevier, Elsevier, vol. 11(4), pages 469-485, August.
    10. Julián Messina & Giovanna Vallanti, 2007. "Job Flow Dynamics and Firing Restrictions: Evidence from Europe," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(521), pages 279-301, 06.
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