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Unemployment Compensation and Adjustment Assistance for Displaced Workers: Policy Options for Canada

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  • Riddell, W. Craig

Abstract

This paper examines the role of EI in providing support to “displaced workers,†those who permanently lose their jobs because of changing circumstances. Adjusting to change benefits Canadians as a whole. However, some workers suffer much more from job loss than do others. Those who have held their jobs for an extended period experience substantial earnings losses, while those who have been employed for brief periods experience small losses. Like other job losers, long-tenure displaced workers experience earnings losses due to reduced income during unemployment following displacement. However, unlike other job losers, many long-tenure displaced workers become re-employed at significantly lower wages. EI does not take into account these consequences of job loss. Long-tenure displaced workers constitute a small minority of job losers. My analysis indicates that job losers with 5 or more years of job tenure constitute about 5% of unemployment and 15-20% of permanent job losers. The paper makes several policy recommendations. Some address gaps in research and knowledge, while others recommend enhanced EI benefits for those who suffer greatly from job loss. Since most loss from displacement occurs after reemployment, wage insurance seems the most promising approach for insuring against large losses.

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File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2088%20-%20Riddell.pdf
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Bibliographic Info

Paper provided by Vancouver School of Economics in its series CLSSRN working papers with number clsrn_admin-2011-31.

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Length: 28 pages
Date of creation: 22 Dec 2011
Date of revision: 22 Dec 2011
Handle: RePEc:ubc:clssrn:clsrn_admin-2011-31

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Web page: http://www.clsrn.econ.ubc.ca/

Related research

Keywords: labour market adjustment; job displacement; unemployment; unemployment insurance; adjustment assistance policies; wage insurance;

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References

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  1. Michael B Coelli, 2009. "Parental Job Loss, Income Shocks and the Education Enrolment of Youth," Department of Economics - Working Papers Series 1060, The University of Melbourne.
  2. Marcus Eliason & Donald Storrie, 2009. "Does Job Loss Shorten Life?," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
  3. Schirle, Tammy, 2009. "Earnings Losses of Displaced Older Workers: Accounting for the Retirement Option," CLSSRN working papers clsrn_admin-2009-17, Vancouver School of Economics, revised 16 Feb 2009.
  4. Riddell, W. Craig & Song, Xueda, 2011. "The Impact of Education on Unemployment Incidence and Re-employment Success: Evidence from the U.S. Labour Market," IZA Discussion Papers 5572, Institute for the Study of Labor (IZA).
  5. Jason M. Lindo, 2010. "Are Children Really Inferior Goods? Evidence from Displacement-Driven Income Shocks," Journal of Human Resources, University of Wisconsin Press, vol. 45(2).
  6. Jane Friesen, 1997. "Mandatory notice and the jobless durations of displaced workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 50(4), pages 652-666, July.
  7. Kerwin Kofi Charles & Melvin Stephens, 2004. "Job Displacement, Disability, and Divorce," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 489-522, April.
  8. Riddell, W. Craig & Song, Xueda, 2009. "The Causal Effects of Education on Adaptability," CLSSRN working papers clsrn_admin-2009-15, Vancouver School of Economics, revised 16 Feb 2009.
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