000			03010cam a22003257 4500
001			w25749
003			NBER
005			20211020104206.0
006			m o d
007			cr cnu||||||||
008			210910s2019 mau fo 000 0 eng d
100	1		_aGerard, François.
245	1	0	_aJob Displacement Insurance and (the Lack of) Consumption-Smoothing / _cFrançois Gerard, Joana Naritomi.
260			_aCambridge, Mass. _bNational Bureau of Economic Research _c2019.
300			_a1 online resource: _billustrations (black and white);
490	1		_aNBER working paper series _vno. w25749
500			_aApril 2019.
520	3		_aThe most common forms of government-mandated job displacement insurance are Severance Pay (SP; lump-sum payments at layoff) and Unemployment Insurance (UI; periodic payments contingent on nonemployment). While there is a vast literature on UI, SP programs have received much less attention, even though they are prevalent across countries and predominant in developing countries. In particular, little is known about their insurance value, which critically relies on workers' ability to dissave the lump-sum progressively to smooth consumption after layoff. Using de-identified high-frequency expenditure data and matched employee-employer data from Brazil, we find that displaced workers eligible for both UI and SP increase consumption at layoff by 35% despite experiencing a 17% consumption loss after they stop receiving any benefits. Moreover, this sensitivity of consumer spending to cash-on-hand is present across spending categories and sources of variation in UI benefits and SP amounts. We show that a simple structural model with present-biased workers can rationalize our findings, and we use it to illustrate their implications for the incentive-insurance trade-off between SP and UI. Specifically, the insurance value of SP programs - or of other policies that provide liquidity to workers at layoff - can be severely reduced when consumption is over-sensitive to the timing of benefit disbursement, undermining their advantage in terms of job-search incentives. Our findings highlight the importance of the difference between SP and UI in their disbursement policy, and shed new light on the need for job displacement insurance in a developing country context.
530			_aHardcopy version available to institutional subscribers
538			_aSystem requirements: Adobe [Acrobat] Reader required for PDF files.
538			_aMode of access: World Wide Web.
588	0		_aPrint version record
690		7	_aG22 - Insurance • Insurance Companies • Actuarial Studies _2Journal of Economic Literature class.
700	1		_aNaritomi, Joana. _933281
710	2		_aNational Bureau of Economic Research.
830		0	_aWorking Paper Series (National Bureau of Economic Research) _vno. w25749.
856	4	0	_uhttps://www.nber.org/papers/w25749
856			_yAcceso en línea al DOI _uhttp://dx.doi.org/10.3386/w25749
942			_2ddc _cW-PAPER
999			_c322373 _d280935