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Employment dynamics during COVID-19 in Uruguay

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  • Amarante, Verónica
  • Galván, Estefanía
  • Yapor, Mijail

Abstract

This paper provides novel insights into labor market dynamics during the COVID-19 pandemic and the subsequent recovery period in Uruguay. Using social security administrative records, we focus on the gender-differentiated patterns of labor market transitions following the pandemic outbreak, compared to a previous period. Furthermore, we evaluate the role of unemployment insurance (UI) as an instrument for employment protection during the pandemic-induced recession. The analysis reveals that womenparticularly those with children and earning low wagesexperienced greater employment and wage losses compared to men at the pandemics onset, though they showed signs of recovery in later periods. Moreover, women were more likely to transition from UI to formal employment during the pandemic, diverging from previous trends, largely due to the suspension modality (similar to a temporary lay-off) of the Uruguayan UI program. Through a regression discontinuity (RD) approach, the study identifies positive local effects of the beneficiaries of the UI suspension program on the probability of being employed and earning higher wages for both men and women, eight and twelve months after entering the program. These findings carry significant policy implications, underlying the importance of maintaining and potentially expanding UI programs with temporary suspension schemes, and the necessity of adapting social protection systems to respond quickly to crises. Our results underscore the potential of temporary layoff unemployment insurance schemes in developing countries as effective tools to address unexpected crises or shocks like COVID-19, preserving employment relationships and facilitating faster economic recovery.

Suggested Citation

  • Amarante, Verónica & Galván, Estefanía & Yapor, Mijail, 2025. "Employment dynamics during COVID-19 in Uruguay," IDB Publications (Working Papers) 13944, Inter-American Development Bank.
  • Handle: RePEc:idb:brikps:13944
    DOI: http://dx.doi.org/10.18235/0013355
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    References listed on IDEAS

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    More about this item

    Keywords

    COVID-19; gender; labor market; Unemployment insurance;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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