Impacts of Employment Insurance Pilots to extend benefit entitlements
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Impact of EI Pilot Project 15 which extended EI entitlements by 5 weeks. NBIRDT looked at the impact of 1) all 58 regions receiving the extra 5 weeks, 2) 21 high unemployment regions receiving extra 5 weeks, and 3) no regions receiving extra entitlement.
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Impacts of Employment Insurance Pilots to extend benefit entitlements
- 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)