In recent years, unemployment protection systems based on individual savings have been instituted in several developing countries. Chile was one of the first countries to establish such a system, which at the time was widely referred to as a model for other countries. Since its institution in 2002, the Chilean UISA has gradually been rolled out to cover the wage-earning population to the point that since 2009 its administrative data can be considered to be representative of this segment of the labour force.
This paper examines how the Chilean UISA works, both in terms of its coverage and levels of benefits and how it is different from a traditional unemployment insurance. We undertake a detailed analysis of the administrative data produced by the UISA system, which also enables us to examine the functioning of the Chilean labour market. Based on the interaction between employment characteristics and the conditions imposed by the benefit system, we assess the efficacy of the system and analyse whether the UISA can indeed serve as a model for other developing countries.
