Autor: Gustavo Gonzaga

WP042 – The Effects of a Youth Training Program on Youth Turnover in Brazil

ABSTRACT – Large youth unemployment rates are a structural characteristic of most economies. In Brazil this problem is accompanied by very high youth labor turnover rates, which suggests that the job destruction margin plays an important role in explaining high unemployment rates for this age group. Our main objective in this paper is to provide a first evaluation of a large subsidized training program (Lei do Aprendiz, Apprentice’s Act) targeted to young workers. The program was introduced in 2000 in Brazil with the intention to help the placement of young workers and their attachment to formal jobs. We make use of a huge longitudinal dataset (Rais, Relatório Annual de Informações Sociais), based on administrative data collected by the Labor Ministry, that contains information on the employment histories of all formal workers in Brazil from 2001 to 2006. We attempt to measure the impact of the program on five different outcomes that represent formal labor market attachment and remuneration, using other temporary workers as a control group. We employ three distinct estimation procedures to deal with self-selection in program participation that exploit a discontinuity in its age requirement: 18 year olds could not participate in the program between 2000 and 2005. We use a standard 2SLS, which we denote as parametric IV and two recently proposed estimators: i) a semi-parametric IV due to Battistin and Rettore (2008), and ii) the adjusted matching estimator proposed by Dias...

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WP039 – Social Insurance under Imperfect Monitoring

ABSTRACT – Social insurance programs, including Unemployment Insurance (UI), have been adopted in many countries where informal employment is prevalent and monitoring of eligibility imperfect.  Whether social insurance programs can increase welfare in such a context often remains an open question. To address this issue, we study the Brazilian UI program. Social insurance trades off welfare gains from providing income support and efficiency costs from distorting behaviors. Imperfect monitoring may both exacerbate behavioral responses and, with the possibility to work informally, reduce the need for insurance. Using matched employee-employer data, and two complementary empirical strategies, we estimate the impacts of UI extensions on program and labor market outcomes and their efficiency costs. We find large percentage reductions in hazard rates of formal reemployment, in particular around benefit exhaustion. However, because hazard rates are very low, UI has little impact on formal reemployment and efficiency costs amount to only 5%-11% of the cost of extending benets. Using survey data, we further estimate that 35% of our sample of job-losers is actually unemployed after 5 months of UI, a gure comparable to the US. In our normative framework, these results imply that even a low social value of insurance is consistent with an increase in welfare from extending UI. We obtain that welfare effects from the existing UI program are likely to be positive and may be sizeable.  Download do Paper...

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