Heterogeneous Impacts on Layoffs of Changes in Brazilian Unemployment Insurance Eligibility Rules

Authors

Túlio Cravo, African Development BankFollow
Christopher J. O'Leary, W.E. Upjohn Institute for Employment ResearchFollow
Ana Cristina Sierra, Inter-American Development BankFollow
Leandro Justino Veloso, Inter-American Development BankFollow

Upjohn Author ORCID Identifier

https://orcid.org/0000-0002-3372-7527

Publication Date

2-6-2020

Series

Upjohn Institute working paper ; 20-318

**Published Version**

In Economics Letters 197: 109612

DOI

10.17848/wp20-318

Abstract

This paper is based on the first use of program administrative data from Brazil’s unemployment insurance (UI) program to assess the impact of changes in UI eligibility criteria on layoff probabilities. We exploit exogenous program changes introduced by executive and legislative changes in 2015 to estimate impacts while accounting for the number of prior UI benefit requests. We estimate that changes in UI eligibility criteria had heterogeneous impacts distinguished by the number of prior benefit requests. We show that the 2015 changes in UI eligibility rules reduced layoffs and find evidence that the changes reduced collusion between workers and employers for layoffs because it became harder to extract subsidies from the UI system. The layoff reductions were greatest before workers' second benefit request.

Issue Date

January 2020, Revised October 2020

Subject Areas

UNEMPLOYMENT, DISABILITY, and INCOME SUPPORT PROGRAMS; Unemployment insurance