Paul Storer

Unemployment insurance take-up rates in Canada: facts, determinants, and implications

This paper examines the curious group of unemployed person who are eligible for unemployment insurance benefits but do not receive them. The characteristics of the group are illustrated and factors linked to the decision to take up benefits are identified. A measure is provided for the sensitivity of estimated unemployment insurance disincentive effects to the existence of eligible nonclaimants. The results of the paper suggest that detailed modeling of the decision to receive unemployment insurance benefits is needed if empirical work is to serve as a reliable guide for unemployment insurance policy reform.

US Labour Market Policy and the Canada-US Unemployment Rate Gap

In this paper, we investigate the extent to which changes in US labour market policy in the 1980s may have contributed to the emergence of an unemployment rate gap between Canada and the United States. In that decade, unemployment insurance benefits became taxable, income tax rates fell substantially, and various administrative changes were made that effectively tightened unemployment insurance eligibility requirements. These policy changes are evaluated in the context of a computable equilibrium model of the labour market. Our estimates suggest that all of these reforms together can account for no more than a 0.4 percentage point decline in the US natural rate of unemployment; a combined effect which accounts for 20 percent of the unemployment rate gap.

Separating the effects of aggregate and sectoral shocks with estimates from a Markov-switching search model

Abstract A two-sector stochastic model of labor market search is estimated in order to identify aggregate and sectoral shocks which impact upon the recruitment-intensity decisions of firms. Separation of aggregate and sectoral recruitment effects is achieved through the use of data for two Canadian regions which were affected in opposite directions by recent resource price shocks. The results of the estimation process suggest that sectoral shocks can have significant quantitative effects on unemployment duration and the unemployment rate.

Exploring the Links between Wage Inequality and Unemployment: A Comparison of Canada and the US

This paper examines the links between the unemployment rate gap and wage inequality in the US and Canada. Survey data for displaced workers from the early 1980s are compared for the two countries to examine differenes in wages obtained after displacement. We look at all workers and subgroups of the population and compare entire wage distributions between the countries. While we find a tighter wage-change distribution in Canada, our results do not indicate that this is primarily due to more generous unemployment insurance in Canada. Unemployment insurance does, however, improve wage outcomes for the long-term unemployed in Canada