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Enhancing Coverage and Cost-effectiveness of Brazil’s Unemployment Protection System : Insights from International Experience (English)

The objective of the policy note is to inform reforms of the unemployment protection system of Brazil,through a comparison of its salient features with international benchmarks, and by taking stock of employment dynamics since the 2014 crisis. Recommendations include varying degrees of ambition (and political complexity), from parametric reforms of the unemployment insurance Seguro Desemprego (SD) to more systemic reorganization of programs, and the extension of coverage to growing shares of nondependent workers. The note builds on prior analysis of Brazil’s labor market programs undertaken as part of the World Bank’s expenditure review for Brazil (published World Bank 2018). The main novelties include a broader and deeper international benchmarking, as well as analysis of the unemployment dynamics since 2015, which are important to inform the optimal redesign of unemployment programs. The note was developed before the COVID-19 pandemic, and, while it takes stock of recent trends, it is not meant to be an assessment of Brazil’s emergency response or do justice to the emerging literature and data on the matter. As Brazil prepares for its economic recovery, the note aims to provide valuable information for a national policy debate around the much-needed modernization of the unemployment protection system. The note is organized as follows. The first part of the note takes stock of some of the key characteristics of Brazil’s labor market and unemployment dynamics since the 2014 economic crisis using the National Household Sample Survey Pesquisa Nacional por Amostra de Domicílios Contínua (PNADc) survey data. The centerpiece of the analysis is the comparison of the design features of SD to a range of international programs of reference countries, through a benchmarking exercise of its regulation, generosity, activation measures, and effective coverage rate. The final part of this note summarizes the key findings and provides recommendations.

Details

  • Author

    Morgandi,Matteo, Fietz,Katharina Maria, Ed,Malin Linnea Sofia, De Farias,Alison Rocha, Weber,Michael

  • Document Date

    2020/12/01

  • Document Type

    Report

  • Report Number

    AUS0001674

  • Volume No

    1

  • Total Volume(s)

    1

  • Country

    Brazil,

  • Region

    Latin America & Caribbean,

  • Disclosure Date

    2021/02/16

  • Disclosure Status

    Disclosed

  • Doc Name

    Enhancing Coverage and Cost-effectiveness of Brazil’s Unemployment Protection System : Insights from International Experience

  • Keywords

    transition from school to work; Labor Market; replacement rate; unemployment protection; unemployment benefit; active labor market program; Active Labor Market Policies; active labor market policy; payout period; social protection instrument; involuntary job loss; changing labor market; labor market context; international good practice; categories of worker; unemployment insurance program; formal labor market; formal sector worker; informal worker; labor market segmentation; duration of unemployment; panel data analysis; total poverty rate; income maintenance program; net job loss; labor market service; individual savings accounts; degree of complexity; international labour organization; privileges and immunity; unemployment insurance benefit; number of beneficiaries; job creation program; risk management instrument; combination of factor; incentive to save; more developed countries; previous work experience; national policy debate; performance-based financing; unemployment benefit system; labor market expenditure; job search assistance; number of workers; labor market experience; formal employment; income support; economic crisis; wage worker; benchmarking exercise; work history; moral hazard; take stock; unemployment programs; coverage rate; severance pay; dismissed worker; international benchmarks; cash benefit; minimum wage; empirical literature; unemployment rate; job offer; wage subsidy; labor income; employment contract; finance for individual; contribution requirement; net employment; international standard; Wage Subsidies; administrative datum; low-wage worker; unemployment increase; contribution period; individual account; mandatory saving; employer having; strategic behavior; benefits benefit; policy option; complementary policies; international comparator; best practice; wage level; eligibility criterion; reemployment rate; young people; dependent children; domestic worker; labor status; employed persons; monthly wage; contract termination; new job; job turnover; sample survey; support system; national household; lower deficit; financing system; low-income worker; economic recovery; payroll tax; social assistance; unemployment fund; average unemployment; demographic weight; survey data; smooth income; market rate; tax base; maximum benefit; international programs; high unemployment; operational reform; low-skilled worker; state policy; total unemployment; unemployed willing; labor program; job rotation; Social Welfare; fiscal cost; labor code; turnover rate; firing rate; social contract; voluntary separation; previous crisis; bottom quintile; financial protection; income loss; in poverty; benefit amount; long-term saving; social cost; demand shock; trade sector; emergency response; international benchmarking; independent worker; calendar year; employment dynamic; recent publication; complementary reform; public support; payment schedule; unemployed youth; labor regulation; labor contract; systemic reform; hazard rate; average wage; Informal Jobs; job tenure; as beneficiary; eligibility conditions; informal employment; country classification; Program Type; legislative change; intertemporal consumption; consumption loss; international examples; mandatory contribution; consumption smoothing; lump-sum distribution; summing up; retirement age; global benchmark; idiosyncratic shock; Public Employment; rural worker; mandatory coverage; government worker; paid worker; self-employed account; private university; casual worker; gross earnings; employee contributions; minimum contribution; noncommercial purposes; high share; subsidiary right; unemployed people; strategic guidance; program leader; unemployed receiving; active program; empirical analysis; long-term unemployment; household expenditure; firm owner; labor earning; income shock; social program; inequitable distribution; working population; social impact; job match; institutional legacy; industrial revolution; weak enforcement; fiscal saving; federal grant; wages ris

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Citation

Morgandi,Matteo Fietz,Katharina Maria Ed,Malin Linnea Sofia De Farias,Alison Rocha Weber,Michael

Enhancing Coverage and Cost-effectiveness of Brazil’s Unemployment Protection System : Insights from International Experience (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/570141612933174121/Enhancing-Coverage-and-Cost-effectiveness-of-Brazil-s-Unemployment-Protection-System-Insights-from-International-Experience