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Unintended consequences of unemployment insurance: Evidence from stricter eligibility criteria in Brazil

Cristiano C. Carvalho, Raphael Corbi and Renata Narita

Economics Letters, 2018, vol. 162, issue C, 157-161

Abstract: This paper investigates the impact of changes in the eligibility criteria of unemployment 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.

Keywords: Unemployment insurance; Labor legislation; Job turnover; Layoffs (search for similar items in EconPapers)
JEL-codes: J63 J64 J65 J46 (search for similar items in EconPapers)
Date: 2018
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