Unemployment Compensation and Adjustment Assistance for Displaced Workers: Policy Options for Canada
AbstractThis paper examines the role of EI in providing support to â€œdisplaced workers,â€ 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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Bibliographic InfoPaper provided by UBC Department of Economics in its series CLSRN Working Papers with number clsrn_admin-2011-31.
Length: 28 pages
Date of creation: 22 Dec 2011
Date of revision: 22 Dec 2011
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labour market adjustment; job displacement; unemployment; unemployment insurance; adjustment assistance policies; wage insurance;
Find related papers by JEL classification:
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Turnover; Vacancies; Layoffs
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
- NEP-IAS-2012-01-03 (Insurance Economics)
- NEP-LAB-2012-01-03 (Labour Economics)
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