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Institutional specifics and unemployment insurance eligibility in Canada: How sensitive are employment duration effects?


  • Michael P. Kidd

    () (Department of Economics, University of Aberdeen, Edward Wright Building Dunbar Street, Old Aberdeen, AB24 3QY United Kingdom)

  • Michael Shannon

    () (Department of Economics, Lakehead University, Thunder Bay, Canada, P7B 5E1)


The paper examines the influence of unemployment insurance on the duration of employment spells in Canada using the 1988-90 Labour Market Activity Survey. The primary focus of the paper is to evaluate whether estimated UI effects are sensitive to the degree to which institutional rules and regulations governing UI eligibility and entitlement are explicitly modelled. The key result of the paper is that it is indeed important to allow for institutional detail when estimating unemployment insurance effects. Estimates using simple proxies for eligibility indicate small, often insignificant UI effects. The size and significance of the effects rise as more realistic versions of the variables are adopted. The estimates using the eligibility variables incorporating the greatest level of institutional detail suggest that a jump in the hazard rate by a factor of 2.3 may not be an unreasonable estimate of the effect.

Suggested Citation

  • Michael P. Kidd & Michael Shannon, 2000. "Institutional specifics and unemployment insurance eligibility in Canada: How sensitive are employment duration effects?," Empirical Economics, Springer, vol. 25(2), pages 327-350.
  • Handle: RePEc:spr:empeco:v:25:y:2000:i:2:p:327-350

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    References listed on IDEAS

    1. Lawrence J. Christiano & Terry J. Fitzgerald, 2003. "Inflation and monetary policy in the twentieth century," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 22-45.
    2. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
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    More about this item


    unemployment insurance; institutions; employment; duration models;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings


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