How unemployment insurance savings accounts affect employment duration: Evidence from Chile
Paula Nagler
#2013-039
The introduction of unemployment insurance savings accounts (UISA) in
Chile in October 2002 brought in more comprehensive unemployment
protection while decreasing the opportunity costs of job change. Being
the first to empirically investigate the effect of UISA on employment
duration, this paper examines (i) whether the introduction of UISA
affected employment duration among formal private sector workers, and
(ii) the magnitude of this effect. The analysis is performed on
longitudinal social protection data and uses survival analysis
techniques, including non-parametric, semi-parametric and parametric
analysis, and competing-risk models. The paper finds that workers
participating in the scheme show an increased hazard ratio of leaving
employment, or accelerated time to employment termination. The effect is
larger for workers becoming unemployed or inactive compared to workers
changing jobs. The results provide strong support that the introduction
of UISA led to shorter employment duration and higher mobility of the
workforce in Chile.
Keywords: Unemployment Insurance Savings Accounts, Employment Duration,
Survival Analysis, Chile
JEL classification: C41, J63, J64, J65