This paper examines the unemployment insurance (UI) program in Chile. Section A reviews past patterns of inflation and unemployment, giving a flavor of the risks faced by labor market participants in Chile. Section B describes the UI program as it has evolved during the past 50 years and presents data on benefit payments from 1966 to 2001. Comparative data from the UI systems for other South American countries and selected OECD member countries are also presented and compared with Chile. Other programs for the unemployed are also described and discussed. Section C describes the new UI program in Chile that began to be implemented in October 2002 and assesses its strengths and weaknesses.
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