The impact of unemployment insurance savings accounts on subsequent employment quality
Paula Nagler
#2015-026
The introduction of unemployment insurance savings accounts (UISA) in
Chile in October 2002 led to more comprehensive unemployment protection
while decreasing the opportunity cost of job change. Using a
difference-in-differences approach this paper examines whether the
introduction of UISA had an impact on the dierences in subsequent wages
and contract types of (i) workers changing into a new employment, and
(ii) workers experiencing a period of unemployment before re-entering
the labour market. The analysis uses longitudinal social protection data
and is the first to empirically investigate the effect of UISA on
subsequent employment quality. The findings suggest that the
introduction of the UISA scheme had a small negative effect on the wage
difference of formal private sector workers, but no effect on contract
types. Using informal private sector workers as a control group, only
workers of the treatment group experiencing a period of unemployment
show statistically different and positive results in wage growth. The
robustness analysis, using an alternative "as if" introductory date and
a different control group, largely supports these findings. The paper
therefore concludes that the effect of UISA affiliation on wage growth
is slightly negative, but positive compared to a control group for
workers experiencing a period of unemployment, leading to a marginally
higher employment quality for this latter group.
JEL classifications: C21, C31, E24, J64, J65, J68, O54
Keywords: Chile, Contract Type, Employment Quality, Unemployment
Insurance Savings Accounts, Wages