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Unemployment Insurance and Unemployment: An analysis of the aggregate demand-side effects for postwar Canada

  • Hassan Bougrine
  • Mario Seccareccia
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    Most of the theoretical and empirical literature on the effects of unemployment insurance (UI) during the last 25 years has focused on the supply-side implications. The object of this article is to argue that much of those discussions over the disincentive effects of UI is misdirected. Our intention is to bring back to the forefront a discussion of the positive macroeconomic role played by UI net injections in stabilizing aggregate demand. Our empirical results using Canadian data for the postwar period support this Keynesian view of the stabilizing effect of UI in contemporary economies.

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    Article provided by Taylor & Francis Journals in its journal International Review of Applied Economics.

    Volume (Year): 13 (1999)
    Issue (Month): 1 ()
    Pages: 5-21

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    Handle: RePEc:taf:irapec:v:13:y:1999:i:1:p:5-21
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    1. Ross D. Milbourne & Douglas D. Purvis & W. David Scoones, 1991. "Unemployment Insurance and Unemployment Dynamics," Canadian Journal of Economics, Canadian Economics Association, vol. 24(4), pages 804-26, November.
    2. Fortin, Pierre, 1989. "How 'natural' is Canada's high unemployment rate?," European Economic Review, Elsevier, vol. 33(1), pages 89-110, January.
    3. Carl Davidson, 1990. "Recent Developments in the Theory of Involuntary Unemployment," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number rdtiu.
    4. Grubb, David B & Jackman, Richard A & Layard, Richard G, 1982. "Causes of the Current Stagflation," Review of Economic Studies, Wiley Blackwell, vol. 49(5), pages 707-30, Special I.
    5. Ham, John C & Rea, Samuel A, Jr, 1987. "Unemployment Insurance and Male Unemployment Duration in Canada," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 325-53, July.
    6. Phipps, Shelley, 1990. "Quantity-Constrainted Household Responses to UI Reform," Economic Journal, Royal Economic Society, vol. 100(399), pages 124-40, March.
    7. Phipps, S., 1988. "Behavioural Response To Ui Reform In Constrained And Unconstrained Models Of Labour Supply," Department of Economics at Dalhousie University working papers archive 88-01, Dalhousie, Department of Economics.
    8. Feldstein, Martin S, 1978. "The Effect of Unemployment Insurance on Temporary Layoff Unemployment," American Economic Review, American Economic Association, vol. 68(5), pages 834-46, December.
    9. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    10. M. W. Keil & J. S. V. Symons, 1990. "An Analysis of Canadian Unemployment," Canadian Public Policy, University of Toronto Press, vol. 16(1), pages 1-16, March.
    11. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
    12. David Card & W. Craig Riddell, 1993. "A Comparative Analysis of Unemployment in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 149-190 National Bureau of Economic Research, Inc.
    13. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
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