Evaluation of the impact of the increase in EI allowable earnings pilot project on working while on claim and job search behaviour in Canada

Abstract

This paper examines the impact of the change in allowable earnings proposed in a pilot project (WWOC) of the Canadian Employment Insurance system implemented in December 2005 in some Canadian regions on working while on claim behaviour and on job search behaviour. The WWOC pilot is expected to increase the subsidy to low earning/part-time work. Search theory would predict that, all else equal, individuals would increase their intensity of search for these types of jobs. We find evidence that the WWOC pilot substantially increased the incidence and duration of work while on claim receiving full benefits and reduced the incidence and duration of working while on claim receiving no benefits for both men and women. We also find differences in the impact of the WWOC pilot on the job search behaviour of men. These results suggest that the WWOC pilot significantly encouraged working while on claim in low-paying jobs allowing receipt of full benefits. The WWOC pilot significantly reduced the number of hours looking for a job and reduced the likelihood of looking for only a full-time job (relative to looking for only a part-time job or either). These results are robust to the various robustness check analyses performed.