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Working Paper

The Newly Unemployed and the UIF Take-up Rate : Implications for the Wage Subsidy Proposal in South Africa

ADVERSE INCENTIVE EFFECTS AGE GROUP ALLOCATION ALLOCATIVE EFFICIENCY AMOUNT OF CREDITS APR ASSETS BARGAINING BORROWING BUDGET CONSTRAINT CLAIM CLAIMANT CLAIMING UNEMPLOYMENT CLIMATE COLLUSION CONSUMPTION PATTERNS CONSUMPTION SMOOTHING CREATING JOB CREDITS DEPENDENT DISMISSAL EARNING ECONOMIC RESEARCH ECONOMIC STATISTICS EFFICIENCY GAINS EMPLOYEE EMPLOYMENT HISTORY EMPLOYMENT OPPORTUNITIES EMPLOYMENT PROBABILITY EMPLOYMENT RETENTION EMPLOYMENT SECURITY FEMALE EMPLOYMENT FINANCIAL ASSISTANCE FINANCIAL COMMITMENTS FINANCIAL COMPENSATION FINANCIAL CONSTRAINT FINANCIAL CRISIS FINDING JOBS GDP GENERAL EQUILIBRIUM GENERAL EQUILIBRIUM MODEL GOVERNMENT SUBSIDIES GROWTH RATE HIGH WAGES HOUSEHOLD CHARACTERISTICS HOUSEHOLD WEALTH HUMAN CAPITAL HUMAN RESOURCES INCOME INFORMAL SECTOR INSOLVENCIES INSOLVENCY INSURANCE CLAIMS INSURANCE POLICIES INSURANCE SCHEME INSURANCE SYSTEMS JOB CREATION JOB LOSSES JOB MARKET JOB SEARCH JOBS LABOR ECONOMICS LABOR MARKET LABOR RELATIONS LABOR SUPPLY LABOUR LABOUR DEMAND LABOUR FORCE LABOUR MARKET LABOUR MARKET EFFICIENCY LABOUR MARKETS LABOUR RELATIONS LABOUR STANDARDS LABOUR SUPPLY LIQUIDITY MALE WORKER MORAL HAZARD MOTIVATION NATIONAL UNEMPLOYMENT NATIONAL UNEMPLOYMENT RATES NEGOTIATIONS OLDER WORKERS PENALTY PERMANENT INCOME POLICY IMPLICATIONS POLITICAL ECONOMY PRINCIPAL AGENT PROBLEM PRIVATE SECTOR PRODUCTIVE EMPLOYMENT PRODUCTIVITY PRODUCTIVITY GAINS PROFIT MARGIN PROPORTIONAL HAZARD MODEL PUBLIC ECONOMICS RATE OF UNEMPLOYMENT REEMPLOYMENT SUCCESS RELATED CLAIMS RESIGNATION RISING UNEMPLOYMENT RISK SHARING SAFETY SAFETY NET SALARY SECONDARY SCHOOLING SKILLED WORKERS SKILLS DEVELOPMENT SOCIAL COSTS STRUCTURAL UNEMPLOYMENT SUBSTITUTION SUBSTITUTION EFFECTS SURVIVAL ANALYSIS SURVIVAL RATE TRUST FUND UNEMPLOYED UNEMPLOYED INDIVIDUAL UNEMPLOYED PERSONS UNEMPLOYED WORKERS UNEMPLOYMENT UNEMPLOYMENT BENEFITS UNEMPLOYMENT DURATION UNEMPLOYMENT INSURANCE UNEMPLOYMENT INSURANCE BENEFITS UNEMPLOYMENT INSURANCE FUND UNEMPLOYMENT INSURANCE PROGRAM UNEMPLOYMENT INSURANCE SYSTEM UNEMPLOYMENT SPELL VOLUNTARY UNEMPLOYMENT WAGE GAIN WAGE LEVELS WAGE RATES WAGE SUBSIDY WAGE SUBSIDY INTERVENTION WAGE SUBSIDY SCHEME WELFARE SYSTEM WORKER WORKING POOR YOUNG WORKERS YOUNGER WORKERS YOUTH UNEMPLOYMENT YOUTH UNEMPLOYMENT RATES
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World Bank, Washington, DC
Africa | South Africa
2017-06-28T18:49:33Z | 2017-06-28T18:49:33Z | 2011-08

This paper investigates the take-up rate or claim-waiting period rate of the unemployed under the South African Unemployment Insurance Fund (UIF) system. The goal is to identify disincentive effects that income replacement rates (IRR) and accumulated credits may have on the claimant's behavior in terms of their claim waiting period rate (or how quickly they apply for UIF benefits). Utilizing nonparametric and semi-parametric estimation techniques, we find that there is little evidence, if any, for job disincentives or moral hazard problems. More specifically, the majority of claimants that are quickest to claim the UIF benefits are those who have worked continuously for at least four years and accumulated the maximum allowable amount of credits. The authors also note that claimants' waiting periods are indifferent with regard to levels of income replacements yet extremely sensitive to the amount of credits accumulated. Ultimately, the recipients of the UIF benefits do not rely heavily on the replacement incomes and prefer waiting longer for employment opportunities as opposed to exhausting their accumulated credits. The semi-parametric Cox's Proportional Hazard (PH) model confirms that there is a positive relationship between the claimant's accumulation of credits and the associated take-up rate of the UIF.

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