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UBC Theses and Dissertations

Unemployment insurance’s labour market impacts Shen, Kailing


This thesis examines Unemployment Insurance’s (UI) labour market impacts, focusing on the contingent, temporary natures of UI benefit. Using the Survey of Labour and Income Dynamics , the results suggest UI significantly affects both individuals’ employment/unemployment transitions and their job match quality. Chapter 2 presents a historical development of the UI program in Canada; a survey of related literature; and, finally, a theoretical analysis of how contingent, temporary UI benefit coverage could affect labour market dynamics. Chapter 3 empirically examines UI’s impacts on individuals’ employment/unemployment cycles. The two major findings are: (1) UI’s minimum employment requirement is found to delay employment separation in the seasonal sector; and, (2) the availability of UI benefits is found to postpone reemployment in both the seasonal and non-seasonal sectors. Overall, simulation results suggest that without those delays, the national unemployment rate could be 16% lower (e.g. lowered from 7.6% to 6.6%) in the late 1990s. Simulation results also imply that, with the exception of the experience rating rules and the divisor rule, the 1996 Employment Insurance (EI) reform did not have a significant impacts [sic] on the national unemployment rate. Chapter 4 empirically examines UI’s impacts on individuals’ reemployment wages. The random effect model it uses takes account of the endogeneity of both individuals’ employment/unemployment durations and their initial wages. Furthermore, the empirical specification allows UI benefits to have time-varying impacts. The results suggest, overall, that UI coverage increases unemployed workers’ reemployment wages by about 9.5%.

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