Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile

37 Pages Posted: 20 Jan 2010

See all articles by Gonzalo Reyes

Gonzalo Reyes

affiliation not provided to SSRN

Jan C. van Ours

Tilburg University - Department of Economics; University of Melbourne - Department of Economics

Milan Vodopivec

World Bank - Human Development Network; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 2010

Abstract

This study examines the determinants of job-finding rates of unemployment benefit recipients under the Chilean program. This is a unique, innovative program that combines social insurance through a solidarity fund (SF) with self-insurance in the form of unemployment insurance savings accounts (UISAs) - so as to mitigate the moral hazard problem of traditional unemployment insurance programs. Our study is the first one to empirically investigate whether UISAs improve work incentives. We find that for beneficiaries using the SF, the pattern of job finding rates over the duration of unemployment is consistent with moral hazard effects, while for beneficiaries relying on UISAs, the pattern is free of such effects. We also find that for benefit recipient not entitled to use the SF, the amount of accumulation on the UISA does not affect the exit rate from unemployment, suggesting that such individuals internalize the costs of unemployment benefits. Our results provide strong support to the idea that UISAs can improve work incentives.

Keywords: savings account, unemployment duration, unemployment insurance

JEL Classification: C41, H55, J64, J65

Suggested Citation

Reyes, Gonzalo and van Ours, Jan C. and Vodopivec, Milan, Incentive Effects of Unemployment Insurance Savings Accounts: Evidence from Chile (January 2010). CEPR Discussion Paper No. DP7632. Available at SSRN: https://ssrn.com/abstract=1539304

Gonzalo Reyes (Contact Author)

affiliation not provided to SSRN ( email )

Jan C. Van Ours

Tilburg University - Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2880 (Phone)
+31 13 466 3042 (Fax)

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

Milan Vodopivec

World Bank - Human Development Network ( email )

1818 H Street, NW
Washington, DC 20433
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Register to save articles to
your library

Register

Paper statistics

Downloads
2
Abstract Views
540
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information