Abstract
<jats:p>AuthorBérgolo, Marcelo ; Ferrando, Mery ; Giaccobasso, Matias ; Vilá, JoanDate issuedJuly 2026Read: English DOIhttp://dx.doi.org/10.18235/0014409SubjectLabor Force; Labor; Unemployment Insurance; Forced Migration; Social Protection; Wage; Administrative Register; PovertyJEL codeJ64 - Unemployment: Models, Duration, Incidence, and Job Search; J65 - Unemployment Insurance • Severance Pay • Plant Closings; I38 - Government Policy • Provision and Effects of Welfare Programs; H53 - Government Expenditures and Welfare ProgramsCountryUruguayCategoryWorking PapersJob displacement generates large and persistent income losses. This paper examines how alternative social protection mechanisms mitigate the consequences of job loss in Uruguay, a middle-income country with a relatively well-developed social safety net. Using matched employer-employee administrative data, we combine variation from mass layoffs with difference-in-differences and regression-discontinuity designs to estimate the effects of job displacement and the insurance value of two policies: (i) a traditional contributory unemployment insurance program and (ii) a noncontributory conditional cash transfer program targeting low-income households. We document that after employment falls it gradually rebounds, while earnings decline sharply, with labor income falling by about 50% in the short term, and remain below pre-displacement levels even five years later. The persistent earnings losses are primarily driven by lower post-displacement wages. Comparing the insurance value of alternative policy responses, we find that the cash transfer program provides substantial protection for vulnerable and middle-income workers facing layoffs, while unemployment insurance does not generate comparable medium-term gains.</jats:p>