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Does the sophistication of use of unemployment insurance evolve with experience?

Author

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  • David Gray
  • Ted McDonald

Abstract

The subject of this paper is the repeat use of UI/EI benefits in Canada. The first objective is to investigate empirically the pattern of adjustment that UI users exhibit over a multiple claim horizon. Our secondary objective is to investigate a behavioural channel that might potentially underlie observed adjustment effects, namely, individual learning effects. We estimate an econometric model of how certain features of their claims change as they file subsequent claims. We find strong empirical patterns suggesting that there does appear to be some sort of an adjustment process; beneficiaries tend to approach a desired value for these particular facets of their UI claims. There appears to be some process of growing sophistication of UI use – which some might label ‘gaming the system’– reflecting the adjustment of claims and the concomitant employment patterns to the provisions and rules of the regime. We also uncover evidence in favour of the existence of individual learning effects. Ce texte examine l’usage à répétition des prestations d’assurance chômage au Canada. Le premier objectif est d’étudier empiriquement le pattern d’ajustement des récipiendaires de prestations au fil de multiples réclamations. Le second objectif est d’étudier un canal d’ajustement des comportements qui pourrait sous‐tendre les ajustements observés – les effets d’apprentissage individuel. On calibre un modèle économétrique qui expose certains aspects des réclamations qui changent au fil des réclamations qui se répètent. Des résultats empiriques robustes suggèrent qu’il semble y avoir un processus d’ajustement; les bénéficiaires tendent à s’approcher de valeurs désirées pour certaines facettes de leurs réclamations d’assurance chômage. Il semble y avoir un processus de sophistication dans l’usage de l’assurance chômage – ce que certains pourraient appeler ‘bien jouer avec le système’– réfléchissant l’ajustement des réclamations et des patterns concomitants d’emploi aux dispositions et règlements du régime. On découvre aussi l’existence d’effets d’apprentissage individuel.

Suggested Citation

  • David Gray & Ted McDonald, 2012. "Does the sophistication of use of unemployment insurance evolve with experience?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 1220-1245, August.
    • Handle: RePEc:wly:canjec:v:45:y:2012:i:3:p:1220-1245
    DOI: 10.1111/j.1540-5982.2012.01732.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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