Joana Naritomi on unemployment insurance schemes and consumption

Different unemployment insurance schemes exist to support displaced formal workers across countries, and their disbursement policies differ substantially. State-contingent transfers, such unemployment insurance (UI) programs, are schemes that transfer benefits periodically to displaced workers who remain non-employed. In contrast, some schemes transfer a benefit amount in a lump-sum fashion at layoff, such as severance pay programs (SPP) and most unemployment insurance savings accounts (UISA) programs. Although most countries provide workers with some combination of periodic benefits and lump-sum schemes, little is known about how the different disbursement designs affect the insurance value they provide to displaced workers. Moreover, the relative importance of these schemes vary systematically across the development path:  lump-sum transfers are more common than UI in developing countries, where the state has limited capacity to monitor workers and a large share of the workforce is informal. This paper contributes to fill this gap using evidence from Sao Paulo, Brazil.