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Unemployment insurance and transitions in the labor market: An evaluation of the Brazilian program

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  • Chahad, José Paulo Zeetano
  • Fernandes, Reynaldo

Abstract

This paper utilizes microsimulation techniques to evaluate the impact of the Brazilian Unemployment Insurance (UI) program on individual transitions among different labor market states in order to verify whether the UI affects the duration of spells and/or their frequencies. We define four labor market states: formal employment, informal employment, unemployment, and inactivity. Our main result is that the UI impact occurs fundamentally on the inactivity of nauheads of family. The UI benefits increase both the duration and frequency of the non-head's inactivity. This happens probably because non-heads have, on average, lower wages and, therefore, a smaller importance in family income and a higher replacement rate. Our evidence does not support the hypothesis that the rise in non-head's inactivity occurs due to head's benefits.

Suggested Citation

  • Chahad, José Paulo Zeetano & Fernandes, Reynaldo, 2002. "Unemployment insurance and transitions in the labor market: An evaluation of the Brazilian program," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 22(2), November.
    • Handle: RePEc:sbe:breart:v:22:y:2002:i:2:a:2737
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    References listed on IDEAS

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    1. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
    2. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-782, July.
    3. W. Henry Chiu & Edi Karni, 1998. "Endogenous Adverse Selection and Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 806-827, August.
    4. Bruce D. Meyer, 1995. "Lessons from the U.S. Unemployment Insurance Experiments," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 91-131, March.
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    Cited by:

    1. François Gerard & Gustavo Gonzaga, 2011. "Unemployment Insurance in Developing Countries: The Case of Brazil," Textos para discussão 593, Department of Economics PUC-Rio (Brazil).

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