Informal Labor and the Efficiency Cost of Social Programs: Evidence from Unemployment Insurance in Brazil

2021 ◽  
Vol 13 (3) ◽  
pp. 167-206
Author(s):  
François Gerard ◽  
Gustavo Gonzaga
Keyword(s):  
United States ◽  
Moral Hazard ◽  
Labor Markets ◽  
Unemployment Insurance ◽  
The United States ◽  
Social Programs ◽  
Informal Labor ◽  
Experimental Variation ◽  
Efficiency Cost ◽  
Quasi Experimental

It is widely believed that the presence of a large informal sector increases the efficiency cost of social programs in developing countries. We evaluate such claims for the case of unemployment insurance (UI) by combining an optimal UI framework with comprehensive data from Brazil. Using quasi-experimental variation in potential UI duration, we find clear evidence for the usual moral hazard problem that UI reduces incentives to return to a formal job. Yet, the associated efficiency cost is lower than it is in the United States, and it is lower in labor markets with higher informality within Brazil. This is because formal reemployment rates are lower to begin with where informality is higher, so that a larger share of workers would draw UI benefits absent any moral hazard. In sum, efficiency concerns may actually become more relevant as an economy formalizes. (JEL J65, O15, O17, E26, D82, J46)

UI ELIGIBILITY RULE, MORAL HAZARD, AND OPTIMAL UNEMPLOYMENT TRANSFER SCHEME

2017 ◽  
Vol 23 (4) ◽  
pp. 1586-1621
Author(s):  
Min Zhang ◽  
Jia Pan
Keyword(s):  
United States ◽  
Moral Hazard ◽  
Unemployment Insurance ◽  
Strategic Behavior ◽  
The United States ◽  
Imperfect Monitoring ◽  
Transfer Scheme ◽  
Moral Hazards ◽  
Job Searches ◽  
Key Features

This paper derives the optimal unemployment insurance (UI) transfer scheme, UI benefits, and UI contribution fees: When a worker has to earn his or her UI eligibility through work, the UI benefits do not last forever, and the UI agency has imperfect monitoring power on the strategic behavior of the worker. We show that the consideration of the UI eligibility rule generates the effective entitlement effect, which serves as an additional incentive device and alters the nature of the optimal UI transfer scheme established in literature. In contrast with previous studies, we find that when the effective entitlement effect is large, it completely removes the moral hazards in job searches, job acceptances, and job quits. As a result, the optimal UI benefits and contribution fees become constant. Calibrated to the data in the United States, the model reproduces some key features of the existing UI system.

scholarly journals When are Layoffs Acceptable? Evidence from a Quasi-Experiment

ILR Review ◽  
2000 ◽  
Vol 53 (3) ◽  
pp. 381-400 ◽  
Author(s):  
Gary Charness ◽  
David I. Levine
Keyword(s):  
United States ◽  
Labor Markets ◽  
New Technology ◽  
Silicon Valley ◽  
Employee Commitment ◽  
The United States ◽  
Internal Labor Markets ◽  
Product Demand ◽  
Rent Sharing ◽  
Quasi Experimental

If, as has been widely suggested, internal labor markets are declining and a new employment contract with reduced employer-employee commitment is emerging, the criteria by which employees judge layoffs as fair or unfair may be changing. This paper presents findings relevant to that question, based on quasi-experimental surveys in Canada and the United States. Respondents rated layoffs stemming from reduced product demand as more fair than those resulting from employee suggestions. Behind this judgment, apparently, was the normative premise that companies should not punish employees for their efforts; rent-sharing norms appear to have played little or no role, as respondents deemed new technology an acceptable reason for layoffs. Consistent with theories of distributive and procedural equity, layoffs were perceived as more fair if the CEO voluntarily “shared the pain.” Respondents in Silicon Valley were not more accepting of layoffs than were those in Canada, on average.

Capstone experiences in small MPA programs in the United States

2016 ◽  
Vol 35 (2) ◽  
pp. 141-156 ◽  
Author(s):  
Younhee Kim
Keyword(s):  
United States ◽  
Public Administration ◽  
The United States ◽  
Directed Group ◽  
Capstone Course ◽  
Knowledge And Skills ◽  
Paper Model ◽  
Capstone Courses ◽  
Pilot Experience ◽  
Quasi Experimental

A capstone experience, as an exit degree requirement, allows Master of Public Administration (MPA) students to build quasi-experimental practices by applying learned knowledge and skills throughout their curriculum in the United States. Accredited MPA programs have implemented their capstone courses differently to achieve required standards. Small programs have faced more challenges in organizational capacities than big programs. Although no consensus on standard capstone course components has been made, this study intends to discuss feasible capstone formats for small programs by reviewing the relatively small accredited MPA programs. The majority of the comparable programs have adopted the professional paper model with different course structures. In response to the program reviews and the pilot experience, three components are suggested to redesign a capstone course for small programs: faculty-directed; group-based; and project-focused. The capstone pilot experience has confirmed that ownership by the involvement of many faculty and external inputs in designing the course is critical to implement successful capstone experiences for small programs.

scholarly journals Labor Markets and Economic Inequality in the United States since the End of the 1970s

2005 ◽  
Vol 35 (4) ◽  
pp. 655-673 ◽  
Author(s):  
John Schmitt
Keyword(s):  
United States ◽  
Labor Markets ◽  
Bargaining Power ◽  
The United States ◽  
International Competition ◽  
Middle Income ◽  
The Past ◽  
State And Local Government ◽  
Real Value ◽  
State And Local

By most measures, the United States is the most unequal of the world's advanced capitalist economies, and inequality has increased substantially over the past 30 years. This article documents trends in the inequality of three key economic distributions—hourly earnings, annual incomes, and net wealth—and relates these developments to changes in economic and social policy over the past three decades. The primary cause of high and rising inequality is the systematic erosion of the bargaining power of lower- and middle-income workers relative to their employers, reflected in the erosion of the real value of the minimum wage, the decline in unions, widescale deregulation of industries such as airlines and trucking, the privatization and outsourcing of many state and local government activities, increasing international competition, and periods of restrictive macroeconomic policy.

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