Unemployment insurance in high informality countries

Arbeitspapier

Providing unemployment insurance is particularly problematic in countries with high informality because workers can claim unemployment benefits and work in the informal sector at the same time. This paper proposes a method to evaluate alternative schemes to provide insurance for unemployed individuals. First, it presents an economy that can be calibrated to reproduce key features of the economy for which the reform will be evaluated. Then, it shows how the implementation of an unemployment insurance savings account (UISA) scheme can be evaluated. The method is applied to Mexico, and the results show how the UISA scheme would eliminate incentives for participation in the informal sector. The implementation of the UISA would imply large welfare gains from the ex-ante perspective.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IDB Working Paper Series ; No. IDB-WP-403

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Social Security and Public Pensions ; Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: Unemployment ; insurance ; Mexico ; informality

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Espino, Emilio ; Sanchez, Juan M.
• Event: Veröffentlichung
• (who): Inter-American Development Bank (IDB)
• (where): Washington, DC
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/115413
• Last update: 10.03.2025, 11:43 AM CET