Incentive effects of unemployment insurance savings accounts: Evidence from Chile

► Traditional UI programs provide protection but also cause job search disincentives. ► UI Savings Accounts (UISA) combine solidarity funding with self-insurance. ► We examine whether UISA indeed internalize the cost of unemployment. ► Using Chilean data, we find that workers who rely on UISA exit unemployment earlier. ► Our findings indicate that via UISA unemployment costs are internalized.