scholarly journals Informal Labor and the Cost of Social Programs: Evidence from 15 Years of Unemployment Insurance in Brazil

2013 ◽  
Author(s):  
Francois Gerard ◽  
Gustavo M. Gonzaga
Keyword(s):  
Unemployment Insurance ◽  
Social Programs ◽  
Informal Labor ◽  
The Cost

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)

scholarly journals The Generalized Roy Model and the Cost-Benefit Analysis of Social Programs

2015 ◽  
Vol 123 (2) ◽  
pp. 413-443 ◽  
Author(s):  
Philipp Eisenhauer ◽  
James J. Heckman ◽  
Edward Vytlacil
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Social Programs ◽  
Benefit Analysis ◽  
Roy Model ◽  
The Cost

UI-Assisted Worksharing as an Alternative to Layoffs: The Canadian Experience

ILR Review ◽  
1982 ◽  
Vol 35 (3) ◽  
pp. 319-329 ◽  
Author(s):  
Frank Reid
Keyword(s):  
Unemployment Insurance ◽  
Typical Case ◽  
Experimental Program ◽  
Percent Reduction ◽  
Canadian Experience ◽  
The Hours ◽  
The Government ◽  
The Cost ◽  
To Receive ◽  
And Training

This study describes and analyzes an experimental program established in Canada in 1977 under which layoffs were avoided in twenty-four firms by reducing the hours worked of all employees and taking advantage of a temporary modification of unemployment insurance legislation that allowed workers to receive UI benefits for the day or so each week that they no longer worked. Employees generally favored the plan because, in the typical case of a 20 percent work reduction, they received an extra day of leisure per week while experiencing only a 5 percent reduction in after-tax income. Most employers also favored the plan because they avoided several costs of layoffs, such as the cost of hiring and training replacements for laid-off workers who do not respond to recall. For various reasons the federal government did not continue the program when the experiment ended in 1979, but in January 1982 the government again implemented the program on a temporary basis. The author argues that UI-assisted worksharing is more efficient and more equitable because it can greatly reduce the distributional inequities of unemployment.

Serving the Unemployed: Do More Generous Social Insurance Programs Provide Better Quality Service?

2021 ◽  
Vol 36 (3) ◽  
pp. 1-11
Author(s):  
Compton Mallory E.
Keyword(s):  
Social Welfare ◽  
Unemployment Insurance ◽  
Social Insurance ◽  
State Level ◽  
Positive Association ◽  
Economic Security ◽  
Social Programs ◽  
Welfare Programs ◽  
Social Welfare Programs ◽  
The Unemployed

The role and capacity of public administration in contributing to economic security is an increasingly important question. More generous social welfare programs may have greater capacity to insure households against risk, but those programs can effectively provide economic security only to the extent that public organizations deliver benefits promptly and properly to families in need. Administrative performance matters. Given that governments with more generous social programs have demonstrated social welfare to be a priority, are those governments also more likely to put effort towards better administration of welfare programs? This question is addressed here using administrative performance data from U.S. state-level unemployment insurance programs, from 2002-2015. Evidence points to a positive association between generosity and administrative quality: more generous states make fewer administrative errors and that relationship is driven by their making fewer underpayments. If unemployment insurance replacement rates reflect an institutionalized commitment to more generously protecting individuals from economic insecurity, that commitment is also evident in the types of administrative errors agents make.

The Design of Social Policy and Welfare Systems

2020 ◽  
pp. 138-159
Author(s):  
Vito Tanzi
Keyword(s):  
Public Spending ◽  
The Other ◽  
Social Programs ◽  
Anglo Saxon ◽  
Tax Expenditures ◽  
The Road ◽  
Goods And Services ◽  
Welfare Systems ◽  
Economic Stagnation ◽  
The Cost

Most advanced countries over the past eight decades have created various social programs which have become fully-fledged welfare systems. Many countries developed means-tested programs aimed at assisting specific “deserving” individuals and families. Some accompanied these programs with “tax expenditures” designed to reduce the cost of buying particular “meritorious” goods and services. Other countries focused more on providing universal programs aimed at and available to everyone and also tried to avoid the use of tax expenditures, utilizing more broad-based taxes that could finance their higher public spending. The former group (mostly Anglo-Saxon countries) ended up with lower spending and tax levels but with more complicated systems. The other group (Scandinavian and some other European countries) ended up with higher spending and tax levels but with simpler systems. For these latter countries, high taxes and spending programs do not seem to have been the “road to serfdom” or to have led to the economic stagnation predicted.

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