dc.creatorBardey, David 
dc.creatorJaramillo, Fernando 
dc.creatorPeña, Ximena 
dc.identifier.citationBardey, D., Fernando, J., & Peña, X. (2013). Unemployment insurance in the presence of an informal sector. Bogotá: Universidad del Rosario.
dc.descriptionWe study the effect of UI benefits in a typical developing country where the informal sector is sizeable and persistent. In a partial equilibrium environment, ruling out the macroeconomic consequences of UI benefits, we characterize the stationary equilibrium of an economy where policyholders may be employed in the formal sector, short-run unemployed receiving UI benefits or long-run unemployed without UI benefits. We perform comparative static exercises to understand how UI benefits affect unemployed worker´s effort to secure a formal job, their labor supply in the informal sector and leisure time. Our model reveals that an increase in UI benefits generates two opposing effects for the short-run unemployed. First, since search efforts cannot be monitored it generates moral hazard behaviours that lower effort. Second, it generates an income effect as it reduces the marginal cost of searching for a formal job and increases effort.The overall effect is ambiguous and depends on the relative strength of these two effects. Additionally, we show that an increase in UI benefits increases the efforts of long-run unemployed workers. We provide a simple simulation exercise which suggests that the income effect pointed out is not necessarily of second-order importance in comparison with moral hazard strength. This result softens the widespread opinion, usually based on the microeconomic/partial equilibrium argument that the presence of dual labor markets is an obstacle to providing UI in developing countries.
dc.format.extent20 páginas
dc.format.mediumRecurso electrónico
dc.relation.ispartofSerie documentos de trabajo, N. 144
dc.sourceinstname:Universidad del Rosario
dc.sourcereponame:Repositorio Institucional EdocUR
dc.sourceinstname:Universidad del Rosario
dc.subject.lembMercado laboral
dc.subject.lembDesempleo temporal
dc.titleUnemployment insurance in the presence of an informal sector
dc.publisherUniversidad del Rosario
dc.publisher.departmentFacultad de Economía
dc.subject.keywordUnemployment insurance
dc.subject.keywordincome effect
dc.subject.keywordDeveloping countries
dc.subject.keywordinformal sector
dc.type.spaDocumento de trabajo
dc.rights.accesoAbierto (Texto completo)
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dc.rights.ccAtribución-NoComercial-SinDerivadas 2.5 Colombia

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