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Social Insurance, Informality, and Labor MarketsHow to Protect Workers While Creating Good Jobs$
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Markus Frölich, David Kaplan, Carmen Pagés, Jamele Rigolini, and David Robalino

Print publication date: 2014

Print ISBN-13: 9780199685233

Published to Oxford Scholarship Online: March 2015

DOI: 10.1093/acprof:oso/9780199685233.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 08 December 2021

Unemployment Insurance, Job Search, and Informal Employment*

Unemployment Insurance, Job Search, and Informal Employment*

Chapter:
(p.112) 5 Unemployment Insurance, Job Search, and Informal Employment*
Source:
Social Insurance, Informality, and Labor Markets
Author(s):

David N. Margolis

Lucas Navarro

David Robalino

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780199685233.003.0005

This chapter analyses the potential impacts of introducing unemployment insurance (UI) in middle income countries using the case of Malaysia, which today does not have such a system. The analysis is based on a job search model with unemployment and three employment sectors: formal and informal wage employment, and self-employment. The parameters of the model are estimated to replicate the structure of the labor market in Malaysia in 2009 and the distribution of earnings for informal, formal, and self-employed workers. The results suggest that unemployment insurance would have only a modest negative effect on unemployment if benefits are not overly generous. The main effect would be a reallocation of labor from wage into self-employment while increasing average wages in the formal and informal sectors.

Keywords:   unemployment insurance, informal sector, self-employment, job search

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