An analysis of unemployment insurance in Uruguay and discussion of proposed modifications

unemployment insurance is a type of contributory program which aims to provide transitory benefits and has three main objectives: provide workers with temporary income so they can select a job which is suited to their skills, reduce the decline in aggregate spending during recessions by stabilizing the income and consumption of those concerned, and reduce workers' resistance to productive restructuring. a review of international experiences shows that beyond differences in program design, the related problems tend to repeat themselves. in general terms, unemployment insurance programs may stimulate abusive behavior from workers and employers. this article systematizes the weaknesses of uruguay's current unemployment insurance program. statistical data are presented and the extent to which this program may be stimulating abusive behavior is discussed. finally, we consider possible modifications.