Publication
This chapter is part of The Handbook of Social Protection: Evidence and New Directions for Low- and Middle-Income Countries, a comprehensive publication examining the role of social protection systems in addressing poverty, inequality, health outcomes, and public finance challenges in low- and middle-income countries.
Most of the world’s population lives in developing countries, where the risk of job loss is high and social insurance spending is lower than in high-income countries, however policies to protect workers from job displacement are becoming an increasingly important component of social protection in the developing world.
The chapter focuses on job displacement insurance (JDI) policies in developing countries, comparing unemployment insurance (UI) and severance pay (SP) systems across countries at different income levels. It shows that in lower-income countries, workers generally face stricter eligibility requirements for UI, needing to accumulate more contributions before qualifying. When they do qualify, the duration of benefits tends to be shorter, although the share of wages replaced is broadly similar across income groups. In contrast, severance pay is relatively more generous in developing countries, with workers receiving higher payouts for comparable job tenure.
The chapter also highlights a gap in the academic literature, while there has been extensive research on job displacement insurance, most studies focus on high-income countries, leaving developing-country systems underexplored.
You can download the Handbook here.
Published on: 1st January 2026
