Unemployment Insurance and Search Effort in Chile

45 Pages Posted: 19 Sep 2012

See all articles by Cristobal Huneeus

Cristobal Huneeus

affiliation not provided to SSRN

Silvia Leiva

affiliation not provided to SSRN

Alejandro Micco

University of Chile

Date Written: June 2012

Abstract

Unemployment is a pressing problem in many countries in Latin America. Financial crises and increased globalization increase job turnover and therefore the risk of unemployment. To protect workers, Chile implemented an innovative unemployment insurance (UI) system. UI protects workers but creates moral hazard and self-selection issues. Using administrative data for the period 2007 to 2010, the effect of the 2009 reform of UI on job search behavior was studied. The results revealed different job search behavior between workers who use unemployment benefits and those who do not. Search efforts were found to fall as long as unemployment benefits are in place. There is strong evidence that workers who decide not to take UI despite having the right to do so have a higher probability of finding a new job.

JEL Classification: E24, J64, J65

Suggested Citation

Huneeus, Cristobal and Leiva, Silvia and Micco, Alejandro, Unemployment Insurance and Search Effort in Chile (June 2012). IDB Working Paper No. IDB-WP-313. Available at SSRN: https://ssrn.com/abstract=2149060 or http://dx.doi.org/10.2139/ssrn.2149060

Cristobal Huneeus (Contact Author)

affiliation not provided to SSRN

Silvia Leiva

affiliation not provided to SSRN

No Address Available

Alejandro Micco

University of Chile ( email )

Pío Nono Nº1, Providencia
Santiago, R. Metropolitana 7520421
Chile

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