The Long-Term Effects of Unemployment Insurance: Evidence from New Brunswick and Maine, 1940-1991
Posted: 2 Apr 2010
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: Suggested Citation