This document summarizes a study analyzing the impacts of EI pilot projects that extended benefit entitlements by 5 weeks in certain regions of Canada. The study uses a difference-in-difference methodology to compare EI claim durations in treated regions that received extended benefits to untreated regions. The results show the additional 5 weeks of benefits led to 2-3 more weeks claimed and 1-3 more weeks of benefits paid out on average. It also decreased the likelihood of exhausting regular entitlements but increased the chances of reaching the 52 week maximum. The extensions amplified EI's existing countercyclical nature but could also be used to alleviate political pressure for more generous benefits.

1. Impacts of EI Pilots to extend
benefit entitlements
Phil Leonard, UNB Economics & NB-IRDT
Coauthor: David Gray, University of Ottawa
NB-IRDT KT Workshop
September 10, 2019

2. Introduction – Big Picture Context
• Some would argue that EI has not kept pace with changing
nature of work
• Growth of short-term contracts, “precarious” employment
• Lower percentage of unemployed eligible for EI (for many reasons)
• Employment Insurance hasn’t seen a major overhaul since
1996 EI Act
• However, lots of tinkering
• Many Pilot Projects – most of which extend EI benefit entitlement by 5
weeks in specified regions – today, we focus on Pilot Project 15

3. Our focus
• Document the many Pilot Projects and subtle changes to rules
• Focus on those Pilots that extent benefit duration (usually by 5 weeks)
• Usually in high unemployment regions targeting seasonal workers
• Have become common policy response to political pressure for more generous EI
• Focus on Pilot 15 in three time periods
• Economic Action Plan (Sept. 11, 2009 to Sept 11, 2010) – all 58 EI regions
receive extra 5 weeks entitlement
• Pilot 15 (Sept 12, 2010 to September 15, 2012) – 21 high unemployment
regions receive extra 5 weeks
• Post period (Sept. 16-2012 to Oct. 11, 2014) – No regions receive extra
entitlement
• What is impact of these programs on duration of unemployment?

4. Methods
• Data: EI Status Vector
• Week-by-week EI claims records
• Benefit: Massive number of observations with detailed claim histories
• Challenge: No information on unemployment duration, only claim
duration
• Difference-in-Difference Methodology
• compares treated EI regions before, during and after Pilot to non-
treated regions during same time period

5. Table 1 – Pilot 15 Descriptive Statistics
Pilot Regions All-Non-Pilot Regions
A B C D E F
Before
During
Pilot
After Before
During
Pilot
After
Total Weeks on Claim
40.5 39.2 37.6 35.9 30.8 30.7
Number of Weeks of Benefit Paid
24.7 23.9 22.7 22.5 18.4 18.0
Entitlement Weeks
41.7 38.6 35.0 41.6 31.1 30.6
Exhausted Entitlement
0.224 0.244 0.312 0.224 0.299 0.299
Exhausted 52 weeks
0.338 0.342 0.290 0.205 0.161 0.166
Within 2 weeks of exhausting
entitlement
0.052 0.050 0.053 0.040 0.038 0.040
N
513,790 982,850 969,960 1,089,615 2,147,590 2,072,560

6. Table 2 – Pilot 15 Difference-in-Difference Regression Results
Before & After Before only After Only
Total Weeks on Claim 2.3129*** 3.7714*** 1.6548***
Number of Benefit Weeks 1.6030*** 3.2296*** 0.8237***
Weeks of Entitlement 4.4657*** 7.1114*** 3.160***
Exhausted Benefit Entitlement -0.0634*** -0.0547*** -0.0691***
Exhausted at 52 weeks 0.0536*** 0.0489*** 0.0586***
Within 2 Weeks of Benefit Exhaustion -0.0013 -0.0003 -0.0017
N 7,759,430 4,733,840 6,172,955

7. Results Summary
• Additional five weeks had expected effects on benefit duration
• 2-3 additional weeks on claim and 1-3 additional weeks paid
• Less likely to exhaust entitlement weeks but more likely to reach 52
week maximum
• No impact on “strategic behaviour” as measured by leaving claim just
before exhaustion

8. Next steps
• Similar analysis for Pilot Project targeting 2016 commodities
downturn
• Slightly different in that it targeted 15 regions that had an increase in
their unemployment rate, rather than high overall level
• Targeting cyclical unemployment rather than seasonal
• Same additional 5 weeks

9. Discussion
• Basic EI rules provide for longer benefits when region’s
unemployment rate increases (i.e. countercyclical)
• Pilot projects amplify this if done during economic downturns, but may
be used to alleviate political pressure especially for seasonal (not
cyclical) unemployment
• Big picture: EI known to cause substantial cross-industry
subsidization from more efficient to less efficient industries
• May lead to labour hoarding issue (e.g. in seasonal industries)
• Issue may be increased with regular pilot projects in the same regions
(to seasonal industries)