The political economy of unemployment insurance based on individual savings account: lessons from Chile

Kirsten Sehnbruch, Rafael Carranza and José Joaquín Prieto

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In recent years, unemployment protection systems based on individual savings have been instituted in several developing countries. Chile was one of the first to establish such a system, which at the time was widely cited as a model for other countries. This article discusses the particular political context in which the Chilean system was created before examining how it works in terms of coverage and levels of benefits received by unemployed workers. The authors undertake a detailed analysis of the administrative data produced by the system and conclude that the insurance covers only a small proportion of the unemployed, as most workers generally had precarious jobs that did not allow them to contribute to the system consistently. The Chilean case illustrates how difficult it is to establish functioning unemployment insurance in developing countries with precarious labour markets. Based on the interaction between employment characteristics and the conditions imposed by the benefit system, the article assesses the efficacy of the Unemployment Insurance Savings Accounts (UISA) system and analyses whether it can indeed serve as a model for other developing countries.

JEL-codes: E24 I3 (search for similar items in EconPapers)
Date: 2018-10-18
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Citations: View citations in EconPapers (4)

Published in Development and Change, 18, October, 2018, pp. 1-28. ISSN: 0012-155X

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Related works:
Journal Article: The Political Economy of Unemployment Insurance based on Individual Savings Accounts: Lessons from Chile (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:90663

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