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This paper investigates how the potential duration of unemployment benefits affects the quality of post-unemployment jobs. It takes advantage of a natural experiment introduced by a change in Slovenia's unemployment insurance law that substantially reduced the potential benefit duration. Although this reduction strongly increased job finding rates, the quality of the post-unemployment jobs remained unaffected. The paper finds that the law change had no effect on the type of contract (temporary versus permanent), the duration of the post-unemployment job, or the wage earned in the job.

Employment Office --- Human Capital --- Job --- Job Match --- Job Matches --- Job Search --- Job Separation --- Job Tenure --- Jobs --- Labor Markets --- Re-Employment Bonuses --- Social Protections and Labor --- Unemployed --- Unemployment --- Unemployment Benefits --- Unemployment Durations --- Unemployment Insurance --- Unemployment Outcomes --- Unemployment Spell --- Unemployment Spells --- Wage Gains --- Worker

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This paper solves and estimates a stochastic model of optimal inter-temporal behavior to assess how changes in the design of the unemployment benefits and pension systems in Brazil could affect savings rates, the share of time that individuals spend outside of the formal sector, and retirement decisions. Dynamics depend on five main parameters: preferences regarding consumption and leisure, preferences regarding formal Vs. informal work, attitudes towards risks, the rate of time preference, and the distribution of an exogenous shock that affects movements in and out of the social security system (given individual decisions). The yearly household survey is used to create a pseudo panel by age-cohorts and estimate the joint distribution of model parameters based on a generalized version of the Gibbs sampler. The model does a good job in replicating the distribution of the members of a given cohort across states (in or out of the social security / active or retired). Because the parameters are related to individual preferences or exogenous shocks, the joint distribution is unlikely to change when the social insurance system changes. Thus, the model is used to explore how alternative policy interventions could affect behaviors and through this channel benefit levels and fiscal costs. The results from various simulations provide three main insights: (i) the Brazilian SI system today might generate distortions (lower savings rates and less formal employment) that increase the costs of the system and might generate regressive redistribution; (ii) there are important interactions between the unemployment benefits and pension systems, which calls for joint policy analysis when considering reforms; and (iii) current distortions could be reduced by creating an actuarial link between contributions and benefits and then combining matching contributions and anti-poverty targeted transfers to cover individuals with limited or no savings capacity.

Access to Finance --- Compensation and Benefits --- Debt Markets --- Economic Theory and Research --- Emerging Markets --- Employment levels --- Exogenous shock --- Exogenous shocks --- Finance and Financial Sector Development --- Gender --- Gender and Law --- Household survey --- Informal sector --- Jobs --- Labor demand --- Labor force --- Labor market --- Labor Markets --- Labor Policies --- Labor supply --- Law and Development --- Macroeconomics and Economic Growth --- Pensions and Retirement Systems --- Private sector --- Private Sector Development --- Private sector workers --- Program costs --- Retirement --- Social Protections and Labor --- Unemployment --- Unemployment benefits --- Unemployment insurance --- Unemployment insurance system --- Unemployment spell --- Unintended consequences --- Wages --- Youth and Government