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Incentive effects of unemployment insurance savings accounts: Evidence from Chile

van Ours,J.C.
; 
Reyes,G.
; 
Vodopivec,M.
Abstract
The paper, the first one to empirically examine whether individual accounts internalize the cost of unemployment, estimates the determinants of job finding rates of unemployment benefit recipients under the Chilean program. This is a unique, innovative program that combines social insurance, provided via solidarity funding, with self-insurance in the form of unemployment insurance savings accounts (UISAs). The paper shows that beneficiaries who use solidarity funding are less likely to exit unemployment in early months than those relying on UISAs only. Moreover, job finding rates are found to be positively correlated with pre-separation UISA balances among those that use solidarity funding, but are found to be uncorrelated with balances for those relying on UISAs only. While the findings are consistent with the effects expected under the internalization of unemployment costs via UISAs, they do not pinpoint unambiguously the causal link, as alternative mechanisms may be responsible for the observed correlations, particularly selection into the use of UISAs.
Description
Appeared earlier as CentER DP 2010-004
Date
2011
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Tilburg University Research Output Collection
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Keywords
SDG 1 - No Poverty
Citation
van Ours, J C, Reyes, G & Vodopivec, M 2011, 'Incentive effects of unemployment insurance savings accounts : Evidence from Chile', Labour Economics, vol. 18, no. 6, pp. 798-809. https://doi.org/10.1016/j.labeco.2011.06.011
URI
https://hdl.handle.net/20.500.14602/56112
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