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

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 28.06.2005, 12:15 - 13:30

   

Presentation by 

Peter J. Kuhn (University of California, Santa Barbara)
   

Abstract:

New Brunswick and Maine are an adjacent Canadian province and U.S. state
with similar populations, climates and natural resource endowments. Over
the last half-century, however, their unemployment insurance systems have
evolved very differently, with the Canadian UI system eventually
comprising a large share of both total transfer income and total income in
the province. Using the five decennial censuses in both jurisdictions over
this period from 1940 to 1991, we estimate the long-term effects of UI
program parameters on labor market outcomes. We find that UIs implicit
subsidy to part-year work substantially increases the prevalence of
part-year work. This effect is not confined to seasonal industries. Our
estimates of UI effects are considerably greater than those obtained from
other studies because (a) the longer time horizon in our study allows for
more adjustments to the UI system to occur, i.e. gives agents time to
build a lifestyle around the program; and (b) the use of Maine as a
control group for UI changes in New Brunswick allows us to adjust for a
secular downward trend in part-year work among women, which otherwise
would understate the effects of the UI system.

   
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