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Does unemployment insurance offer incentives to take jobs in the formal sector?

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  • Mariano Bosch

    (Inter-American Development Bank, USA)

Abstract

Unemployment insurance can be an efficient tool to provide protection for workers against unemployment and foster formal job creation in developing countries. How much workers value this protection and to what extent it allows a more efficient job search are two key parameters that determine its effectiveness. However, evidence shows that important challenges remain in the introduction and expansion of unemployment insurance in developing countries. These challenges range from achieving coverage in countries with high informality, financing the scheme without further distorting the labor market, and ensuring progressive redistribution.

Suggested Citation

  • Mariano Bosch, 2016. "Does unemployment insurance offer incentives to take jobs in the formal sector?," IZA World of Labor, Institute of Labor Economics (IZA), pages 300-300, October.
  • Handle: RePEc:iza:izawol:journl:y:2016:n:300
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    unemployment insurance; informality; developing countries; labor markets; Latin America;
    All these keywords.

    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean

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