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The Long-Term Effects of a Generous Income Support Program: Unemployment Insurance in New Brunswick and Maine, 1940-1991

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  • Kuhn, Peter J.

    (University of California, Santa Barbara)

  • Riddell, Chris

    (University of Waterloo)

Abstract

Using data spanning a half century for adjacent jurisdictions in the U.S. and Canada, we study the long-term effects of a very generous unemployment insurance (UI) program on weeks worked. We find large effects. For example, in 1990, about 6 percent of employed men in Maine's northernmost counties worked fewer than 26 weeks per year; just across the border in New Brunswick that figure was over 20 percent. According to our estimates, New Brunswick's much more generous UI system accounts for about two thirds of this differential. Even greater effects are found among women and less-educated men. We argue that our longer-run, cross-national perspective generates more substantial estimates of program effects because it captures workers' abilities to make a wider variety of adjustments to programs they expect to be permanent.

Suggested Citation

  • Kuhn, Peter J. & Riddell, Chris, 2006. "The Long-Term Effects of a Generous Income Support Program: Unemployment Insurance in New Brunswick and Maine, 1940-1991," IZA Discussion Papers 1919, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1919
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    References listed on IDEAS

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    1. Edward C. Prescott, 2004. "Why do Americans work so much more than Europeans?," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 28(Jul), pages 2-13.
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    5. Daniel S. Hamermesh, 2002. "International Labor Economics," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 709-732, October.
    6. Green, David A & Riddell, W Craig, 1997. "Qualifying for Unemployment Insurance: An Empirical Analysis," Economic Journal, Royal Economic Society, vol. 107(440), pages 67-84, January.
    7. Alberto Alesina & Edward L. Glaeser & Bruce Sacerdote, 2005. "Work and Leisure in the U.S. and Europe: Why So Different?," NBER Working Papers 11278, National Bureau of Economic Research, Inc.
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    11. George J. Borjas, 1980. "The Relationship between Wages and Weekly Hours of Work: The Role of Division Bias," Journal of Human Resources, University of Wisconsin Press, vol. 15(3), pages 409-423.
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    Cited by:

    1. David Gray & Ted McDonald, 2012. "Does the sophistication of use of unemployment insurance evolve with experience?," Canadian Journal of Economics, Canadian Economics Association, vol. 45(3), pages 1220-1245, August.
    2. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    3. Colin Busby & Alexandre Laurin & David Gray, 2009. "Back to Basics: Restoring Equity and Efficiency in the EI Program - EI Reform Part II," e-briefs 84, C.D. Howe Institute.

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    More about this item

    Keywords

    income support; Canada; unemployment insurance; labor supply;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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