In a context of high labor informality, this study provides the first empirical evidence showing that unemployment benefits induce workers to take informal jobs. Yet, it shows that these effects are mitigated over the medium-term and that unemployment benefits may still be desirable in developing countries, despite the presence of informal jobs.
Britto, D. G. (2020). The employment effects of lump-sum and contingent job insurance policies: Evidence from brazil. The Review of Economics and Statistics (forthcoming)