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Savings for Unemployment in Good or Bad Times: Options for Developing Countries

  • Robalino, David A.


    (World Bank)

  • Vodopivec, Milan


    (International School for Social and Business Studies, Celje, Slovenia)

  • Bodor, András


    (World Bank)

The paper describes and evaluates unemployment insurance savings accounts (UISAs) – a relatively new and not well-known way of providing unemployment benefits. The UISAs reduce work disincentives by allowing recipients to keep their own unused unemployment contributions, and offer the possibility to extend coverage to informal sector workers. In addition, if integrated with mandatory pension systems (and even social pensions), UISAs can be rapidly deployed and at a low cost, thus becoming a realistic tool to protect workers from the effects of the financial crisis. Even during normal times, the integration with the pension system – and social security in general – would give more flexibility to individuals in the management of short and long term savings (i.e., pension wealth) while avoiding unnecessary administrative costs. The paper discusses issues related to incentives, redistribution, and viability, and outlines a policy framework for design and implementation. It argues that the UISAs system is especially attractive for developing countries, where the "self-policing" nature of the system is particularly important given a much larger informal sector and weaker administrative capacity in comparison to developed countries.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4516.

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Length: 41 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:iza:izadps:dp4516
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  1. Gonzalo Reyes Hartley & Jan C Van Ours & Milan Vodopivec, 2010. "Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile," Working Papers 40, Superintendencia de Pensiones, revised Feb 2010.
  2. Holmlund, Bertil, 1998. " Unemployment Insurance in Theory and Practice," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(1), pages 113-41, March.
  3. Gustavo Gonzaga, 2003. "Labor Turnover and Labor Legislation in Brazil," Textos para discussão 475, Department of Economics PUC-Rio (Brazil).
  4. Robalino, David A. & Bodor, András, 2009. "On the financial sustainability of earnings-related pension schemes with ‘pay-as-you-go’ financing and the role of government-indexed bonds," Journal of Pension Economics and Finance, Cambridge University Press, vol. 8(02), pages 153-187, April.
  5. Vodopivec, Milan, 2008. "How Viable Are Unemployment Insurance Savings Accounts: Simulation Results for Slovenia," IZA Discussion Papers 3438, Institute for the Study of Labor (IZA).
  6. Kugler, Adriana D., 2005. "Wage-shifting effects of severance payments savings accounts in Colombia," Journal of Public Economics, Elsevier, vol. 89(2-3), pages 487-500, February.
  7. Milan Vodopivec & Andreas W�rg�tter & Dhushyanth Raju, 2005. "Unemployment Benefit Systems in Central and Eastern Europe: A Review of the 1990s1," Comparative Economic Studies, Palgrave Macmillan, vol. 47(4), pages 615-651, December.
  8. Adriana Kugler, 2004. "The Effect of Job Security Regulations on Labor Market Flexibility: Evidence from the Colombian Labor Market Reform," NBER Working Papers 10215, National Bureau of Economic Research, Inc.
  9. Marcela Eslava & John Haltiwanger & Adriana Kugler & Maurice Kugler, 2010. "Factor Adjustments after Deregulation: Panel Evidence from Colombian Plants," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 378-391, May.
  10. B. Douglas Bernheim & Antonio Rangel, 2005. "Behavioral Public Economics: Welfare and Policy Analysis with Non-Standard Decision-Makers," NBER Working Papers 11518, National Bureau of Economic Research, Inc.
  11. Stiglitz, Joseph E. & Yun, Jungyoll, 2005. "Integration of unemployment insurance with retirement insurance," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2037-2067, December.
  12. Florian Baumann & Nikolai Stähler, 2005. "Financing Unemployment Benefits: Dismissal versus Employment Taxes," Working Papers of the Research Group Heterogenous Labor 05-03, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
  13. Martin Feldstein & Daniel Altman, 1998. "Unemployment Insurance Savings Accounts," NBER Working Papers 6860, National Bureau of Economic Research, Inc.
  14. Jan C. van Ours & Milan Vodopivec, 2006. "How Shortening the Potential Duration of Unemployment Benefits Affects the Duration of Unemployment: Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 351-378, April.
  15. James Heckman & Carmen Pages, 2003. "Law and Employment: Lessons from Latin America and the Caribbean," NBER Working Papers 10129, National Bureau of Economic Research, Inc.
  16. Piggot, John & Robalino, David & Jimenez-Martin, Sergi, 2008. "Incentive Effects of Retirement Income Transfers," MPRA Paper 12020, University Library of Munich, Germany.
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