The Long-Term Effects of Unemployment Insurance: Evidence from New Brunswick and Maine, 1940-1991

Posted: 2 Apr 2010

See all articles by Chris Riddell

Chris Riddell

University of British Columbia (UBC)

Peter Kuhn

University of California, Santa Barbara (UCSB) - Department of Economics; IZA Institute of Labor Economics; National Bureau of Economic Research (NBER)

Date Written: January 1, 2010

Abstract

Using data spanning half a century for adjacent jurisdictions in the United States and Canada, the authors study the long-term effects of a generous unemployment insurance (UI) program on the distribution of weeks worked. They find substantial effects. For example, in 1990, about 12.6% of working-age men in Maine’s northernmost counties worked between 1 and 39 weeks; just across the border in New Brunswick, the figure was 25.6%. According to the estimates, New Brunswick’s much more generous UI system accounts for over three-fourths of this differential. In part because part-year workers are drawn from both ends of the distribution of annual weeks worked (0 weeks and 40-52 weeks), the generosity of New Brunswick’s program had only modest estimated effects on total labor supply, even as it substantially increased UI program participation and expenditures.

Keywords: unemployment insurance, Canada, Maine, New Brunswick, UI system

JEL Classification: J6

Suggested Citation

Riddell, Chris and Kuhn, Peter J., The Long-Term Effects of Unemployment Insurance: Evidence from New Brunswick and Maine, 1940-1991 (January 1, 2010). Industrial and Labor Relations Review, Vol. 63, No. 2, 2010, Available at SSRN: https://ssrn.com/abstract=1557895

Chris Riddell (Contact Author)

University of British Columbia (UBC) ( email )

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Peter J. Kuhn

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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