Assessing the feasibility of job loss insurance expansion in Ethiopia
What is your research about?
We propose to study worker and firm views on and willingness to pay for the expansion of job loss insurance in Ethiopia. Job loss insurance consists of payments given to workers after job loss. In Ethiopia, as is common in low-income countries, job loss insurance is limited to a single lump-sum severance payment from the employer, without additional income support. In an ongoing RCT, we are documenting the impacts of two policies expanding job-loss insurance payments for a sample of young female workers, filling an important evidence gap in low income settings. We have initial evidence of positive impacts on expenditure and well-being. However, the RCT does not shed light on two questions that are fundamental to understand the scope for offering the policy at scale: (i) would workers be willing to pay for it and would firms be willing to offer it? And if so, what design modality would be most attractive? (ii) are workers and firms concerned about moral hazard and adverse selection, potentially preventing the emergence of a private market for job loss insurance and requiring a government mandate? To study these questions, we propose to interview a representative sample of firms and their workers in the capital city of Addis Ababa, the economic hub of the country.
How will the Stone Centre grant help your research?
The Stone Centre grant will pay for the administration of the interview and survey, which will happen in three steps:
- We will elicit workers’ incentivized willingness to pay for additional job loss insurance and employers’ willingness to accept for offering this insurance.
- We will ask for predictions about behavioural responses to insurance.
- We will collect information about worker skills and perceptions of the probability of layoff, and we will document whether the workers most interested in insurance are adversely selected.
What will you produce as part of your research?
We plan to generate four sets of deliverables:
- a full research paper combining the experimental analysis and the additional data collection described in this proposal,
- the anonymized data upon publication of the main paper – along with a detailed note on lessons learnt when developing measures of willingness-to-pay for job loss insurance,
- a policy note on the fiscal feasibility of job loss insurance in low-income contexts including recommendations about the optimal design of the payout structure,
- blog posts summarizing the policy recommendations and the full research paper, to be published on the Stone Centre website and other, relevant high-impact blogs (e.g. VoxDev and the IGC blog).
About this grant
Title of the project: Assessing the feasibility of job loss insurance expansion in Ethiopia
Value of the grant: £47,530
Duration: September 2023 – ongoing
