Unintended consequences of unemployment insurance: Evidence from stricter eligibility criteria in Brazil

This paper investigates the impact of changes in the eligibility criteria of unemployment benefits (UI) on layoffs in Brazil. We exploit exogenous variation introduced by a reform in the UI system in 2015. Our difference-in-differences estimates show that UI accounts for 11-13% of the average dismissal rates of eligible workers. Our results are consistent with workers having the incentive to strategically induce their dismissals in order to collect UI benefits.