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Unintended Consequences of Unemployment Insurance: Evidence from Stricter Eligibility Criteria in Brazil

Author

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  • Cristiano C. Carvalho
  • Raphael Corbi, Renata Narita

Abstract

This paper investigates the impact of changes in the eligibility criteria of unemploy- ment benefits (UI) on layoffs in Brazil. We exploit exogenous variation introduced by a reform in the UI system in 2015. Our difference-in-differences estimates show that UI accounts for 11 − 13% of the average dismissal rates of eligible workers. Our results are consistent with workers having the incentive to strategically induce their dismissals in order to collect UI benefits.

Suggested Citation

  • Cristiano C. Carvalho & Raphael Corbi, Renata Narita, 2017. "Unintended Consequences of Unemployment Insurance: Evidence from Stricter Eligibility Criteria in Brazil," Working Papers, Department of Economics 2017_16, University of São Paulo (FEA-USP).
    • Handle: RePEc:spa:wpaper:2017wpecon16
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    File URL: http://www.repec.eae.fea.usp.br/documentos/Carvalho_Corbi_Narita_16WP.pdf
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    References listed on IDEAS

    as
    1. Gustavo Gonzaga, 2003. "Labor Turnover and Labor Legislation in Brazil," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Fall 2003), pages 165-222, August.
    2. Gerard, Francois & Rokkanen, Miikka & Rothe, Christoph, 2015. "Identification and Inference in Regression Discontinuity Designs with a Manipulated Running Variable," IZA Discussion Papers 9604, Institute of Labor Economics (IZA).
    3. Dale T. Mortensen, 1977. "Unemployment Insurance and Job Search Decisions," ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
    4. François Gerard & Miikka Rokkanen & Christoph Rothe, 2020. "Bounds on treatment effects in regression discontinuity designs with a manipulated running variable," Quantitative Economics, Econometric Society, vol. 11(3), pages 839-870, July.
    5. Gerard, François & Rothe, Christoph & Rokkanen, Miikka, 2016. "Bounds on Treatment Effects in Regression Discontinuity Designs under Manipulation of the Running Variable, with an Application," CEPR Discussion Papers 11668, C.E.P.R. Discussion Papers.
    6. Gerard, François & Gonzaga, Gustavo, 2016. "Informal Labor and the Efficiency Cost of Social Programs: Evidence from the Brazilian Unemployment Insurance Program," CEPR Discussion Papers 11485, C.E.P.R. Discussion Papers.
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    Cited by:

    1. Bernardus Van Doornik & David Schoenherr & Janis Skrastins, 2018. "Unemployment Insurance, Strategic Unemployment and Firm-Worker Collusion," Working Papers Series 483, Central Bank of Brazil, Research Department.

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    More about this item

    Keywords

    unemployment insurance; labor legislation; job turnover; layoffs;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J46 - Labor and Demographic Economics - - Particular Labor Markets - - - Informal Labor Market

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