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Unemployment insurance in the presence of an informal sector

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dc.creatorBardey, David
dc.creatorJaramillo Mejía, Fernando
dc.creatorPeña, Ximena
dc.date.accessioned2015-09-22T12:50:39Z
dc.date.available2015-09-22T12:50:39Z
dc.date.created2013-09
dc.date.issued2013
dc.description.abstractWe 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.eng
dc.format.extent20 páginasspa
dc.format.mediumRecurso electrónicospa
dc.format.mimetypeapplication/pdf
dc.format.tipoDocumentospa
dc.identifier.citationBardey, D., Fernando, J., & Peña, X. (2013). Unemployment insurance in the presence of an informal sector. Bogotá: Universidad del Rosario.
dc.identifier.doihttps://doi.org/10.48713/10336_10860
dc.identifier.urihttp://repository.urosario.edu.co/handle/10336/10860
dc.language.isospa
dc.publisherUniversidad del Rosariospa
dc.publisher.departmentFacultad de Economíaspa
dc.relation.citationIssueNo. 144
dc.relation.citationTitleSerie Documentos de trabajo. Economía
dc.relation.ispartofSerie documentos de trabajo, N. 144spa
dc.relation.urihttps://ideas.repec.org/p/col/000092/011014.html
dc.rights.accesRightsinfo:eu-repo/semantics/openAccess
dc.rights.accesoAbierto (Texto completo)spa
dc.rights.ccAtribución-NoComercial-SinDerivadas 2.5 Colombiaspa
dc.source.bibliographicCitationAlvarez-Parra F. and J-M. Sanchez, 2009, "Unemployment insurance with a hidden labor market,", Journal of Monetary Economics , 56, (7), pp. 954-967.
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dc.source.bibliographicCitationCarneiro, F.G and A. Henley, 2002, " Modelling Formal vs. Informal Employment and Earnings: Micro-econometric Evidence for Brazil," working paper, January. Chetty R., 2008, "Moral Hazard vs. Liquidity and Optimal Unemployment Insur- ance," Journal of Political Economy , 116 (2), pp. 173-234.
dc.source.bibliographicCitationPissarides, C., 2000, Equilibrium Unemployment Theory, 2nd Edition , MIT Press Books, The MIT Press, ed. 1, vol. 1, number 0262161877.
dc.source.bibliographicCitationFredriksson, Peter and Bertil Holmlund, 2001, "Optimal Unemployment Insurance in Search Equilibrium," Journal of Labor Economics , Vol. 19, No. 2 (Apr., 2001), pp. 370-399.
dc.source.bibliographicCitationHansen, G. D. and A. Imrohoro º glu, 1992, "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," Journal of Political Economy , Vol. 100, No. 1, Feb., pp. 118-142.
dc.source.bibliographicCitationHopenhayn, H. A. and J.P. Nicolini, 1997, "Optimal Unemployment Insurance," Journal of Political Economy , University of Chicago Press, vol. 105(2), pp. 412-38, April.
dc.source.bibliographicCitationIssler, J. V. and N. S. Piqueira, 2000, "Estimating Relative Risk Aversion, the Discount Rate, and the Intertemporal Elasticity of Substitution in Consumption for Brazil Using Three Types of Utility Function," Brazilian Review of Econometrics, Rio de Janeiro vol. 20, no. 2, pp.201-239, November.
dc.source.bibliographicCitationKarni E., 2000, "Optimal Unemployment Insurance: A Survey," Southern Economic Journal , vol. 66(2), pp. 442-465.
dc.source.bibliographicCitationMazza, Jacqueline, 2000, "Unemployment Insurance: Case Studies and Lessons for Latin America and the Caribbean," No 4192, Research Department Publications, Inter- American Development Bank, Research Department.
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dc.source.instnameinstname:Universidad del Rosariospa
dc.source.instnameinstname:Universidad del Rosariospa
dc.source.reponamereponame:Repositorio Institucional EdocURspa
dc.subject.ddcEconomía laboral
dc.subject.keywordUnemployment insuranceeng
dc.subject.keywordincome effecteng
dc.subject.keywordDeveloping countrieseng
dc.subject.keywordinformal sectoreng
dc.subject.lembMercado laboralspa
dc.subject.lembMicroeconomíaspa
dc.subject.lembDesempleo temporalspa
dc.titleUnemployment insurance in the presence of an informal sectorspa
dc.typeworkingPapereng
dc.type.hasVersioninfo:eu-repo/semantics/acceptedVersion
dc.type.spaDocumento de trabajospa
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