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            <title xml:lang="en">Unemployment Insurance, Job Search, and Informal Employment</title>
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                <title xml:lang="en">Unemployment Insurance, Job Search, and Informal Employment</title>
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                <title level="m">Social Insurance, Informality, and Labor Markets How to Protect Workers While Creating Good Jobs</title>
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                <editor>David Kaplan</editor>
                <editor>Carmen Pages</editor>
                <editor>Jamele Rigolini</editor>
                <editor>David Robalino</editor>
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                <term xml:lang="en">Job search</term>
                <term xml:lang="en">Self employment</term>
                <term xml:lang="en">Informal sector</term>
                <term xml:lang="en">Unemployment insurance</term>
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              <classCode scheme="jel" n="J.J6.J64">J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers/J.J6.J64 - Unemployment: Models, Duration, Incidence, and Job Search</classCode>
              <classCode scheme="jel" n="J.J6.J65">J - Labor and Demographic Economics/J.J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers/J.J6.J65 - Unemployment Insurance • Severance Pay • Plant Closings</classCode>
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              <p>This paper analyses the potential impacts of introducing unemployment insurance (UI) in middle income countries using the case of Malaysia, which today does not have such a system. The analysis is based on a job search model with unemployment and three employment sectors: formal and informal wage employment, and self employment. The parameters of the model are estimated to replicate the structure of the labor market in Malaysia in 2009 and the distribution of earnings for informal, formal and self employed workers. The results suggest that unemployment insurance would have only a modest negative effect on unemployment if benefits are not overly generous. The main effect would be a reallocation of labor from wage into self employment while increasing average wages in the formal and informal sectors.</p>
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