Unemployment insurance reforms reduce layoffs

Smiling young woman in business dress in front of office

Brazil's unemployment insurance program is the largest such program in Latin American and the Caribbean and is relatively expensive. When a recession in 2014 further increased costs, the Brazilian government changed the eligibility rules to contain future costs.

In a new paper and policy brief, Christopher O'Leary, TĂșlio Cravo, Ana Christina Sierra and Leandro Justino Veloso, examine changes in eligibility rules that increased work experience requirements for first- and second-time unemployment insurance applicants. They found the reforms reduced layoffs, although less than previous studies have estimated.

The results also provide some evidence that restrictions on unemployment insurance eligibility reduced collusion between workers and employers using the benefits to subsidize wages.


Research Topics: Unemployment Insurance