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

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  • Peter Kuhn
  • Chris Riddell

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 more than 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.

Suggested Citation

  • Peter Kuhn & Chris Riddell, 2010. "The Long-Term Effects of Unemployment Insurance: Evidence from New Brunswick and Maine, 1940–1991," ILR Review, Cornell University, ILR School, vol. 63(2), pages 183-204, January.
    • Handle: RePEc:sae:ilrrev:v:63:y:2010:i:2:p:183-204
    DOI: 10.1177/001979391006300201
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    References listed on IDEAS

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    1. Daniel S. Hamermesh, 2002. "International Labor Economics," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 709-732, October.
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    Cited by:

    1. Arthur Sweetman & Matthew D. Webb & Casey Warman, 2014. "How Targeted Is Targeted Tax Relief? Evidence From The Unemployment Insurance Youth Hires Program," Working Paper 1298, Economics Department, Queen's University.
    2. Matthew D. Webb & Arthur Sweetman & Casey Warman, 2016. "Targeting Tax Relief at Youth Employment," Canadian Public Policy, University of Toronto Press, vol. 42(4), pages 415-430, December.
    3. Bradley R. Weinberg, 2015. "A Quantitative Assessment of the Effect of First Contract Arbitration on Bargaining Relationships," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(3), pages 449-477, July.
    4. Regev, Tali, 2012. "Unemployment compensation under partial program coverage," Labour Economics, Elsevier, vol. 19(6), pages 888-897.
    5. Neeraj Kaushal & Yao Lu & Nicole Denier & Julia Shu-Huah Wang & Stephen J. Trejo, 2016. "Immigrant employment and earnings growth in Canada and the USA: evidence from longitudinal data," Journal of Population Economics, Springer;European Society for Population Economics, vol. 29(4), pages 1249-1277, October.
    6. Colin Busby & David Gray, 2011. "Mending Canada's Employment Insurance Quilt: The Case for Restoring Equity," C.D. Howe Institute Backgrounder, C.D. Howe Institute, issue 144, November.
    7. Parsons, Donald O., 2014. "Job Displacement Insurance: An Overview," IZA Discussion Papers 8223, Institute of Labor Economics (IZA).

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