Working Paper: NBER ID: w11932
Authors: Peter Kuhn; Chris Riddell
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, crossnational 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.
Keywords: Unemployment Insurance; Labor Supply; Income Support Programs
JEL Codes: J22; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| UI generosity (Y20) | weeks worked (J22) |
| New Brunswick UI system (Y10) | reduced labor supply among men (J22) |
| UI policy differences (L15) | discrepancy in weeks worked for women (J79) |
| 10% increase in income (E25) | raises number of persons working less than half a year (J22) |
| UI program participation elasticity with respect to income for men (H31) | responsiveness of labor supply (J22) |
| UI program participation elasticity with respect to income for women (H31) | responsiveness of labor supply (J22) |