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unemployment benefits
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How can governments fund unemployment insurance in low-income settings?
Unemployment insurance (UI) in Senegal can provide significant welfare gains, but given high levels of informality and a lack of transparency about workers’ status, these gains depend on programme design. UI funded through payroll taxes is effective and feasible as long as the ratio of formal workers to the benefit level is sufficiently high, while UI funded through consumption taxes generally offers lower welfare benefits but is more robust to fraudulent claims.
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Unemployment benefits are very effective in highly informal labour markets
Evidence from Mauritius shows the consequences of losing a formal job in a labour market characterised by high rates of informal employment are significant. Unemployment benefits help mitigate these effects, while generating only small disincentive effects on labour supply.
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Informal labour markets and rent-extraction from the unemployment insurance system: Evidence from Brazil
When eligible for unemployment benefits, workers and firms make strategic layoffs in the presence of informal labour markets