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The basic methodology is to compare consumption patterns before and after EI reform. The COEP surveyed some 4,000 individuals in selected quarters. These individuals are drawn from HRDC's Record of Employment (ROE) administrative file and have experienced a job separation as documented by that file. Each survey participant was interviewed twice following the job separation. The first interview occurred one year after the job separation, and the second interview occurred 10 months after the first interview.

The first round of COEP interviews (cohort 1) was completed in July 1996 — and collected information from individuals who experienced a job separation one year earlier (i.e., in the third quarter of 1995). Twelve cohorts were used in this analysis:

• 4 cohorts with a job separation in the four quarters prior to EI implementation (i.e., 1995 Q3 to 1996 Q2);
• 4 cohorts with a job separation following EI reform (i.e., 1997 Q1 to 1997 Q4); and
• 4 cohorts with a job separation four years after EI reform (i.e., 2000 Q4 to 2001 Q3).

For the purposes of this study, the pre-EI reform period (third quarter of 1995 to second quarter of 1996) is compared to the post-EI reform period (first to fourth quarter of 1997) as a means of determining the changes associated with EI reform. Using four pre-EI reform quarters and four post-EI reform quarters, it becomes possible to control for changes that would have been associated with seasonality alone. No analysis was done during the first phase of EI reform (third and fourth quarters of 1996) as the implementation of EI reform was not complete and any resulting analysis may be inconclusive. A cursory examination of changes occurring in 2000/2001 is also possible with the cohorts covering the last quarter of 2000 and the first three quarters of 2001.

The COEP survey was designed to collect important information on the background demographics of individuals and households, job search activities and outcomes, assets and debts, expenditures, and use of employment insurance and social assistance.¹

COEP includes extensive questions on the consumption patterns of households one year after a job separation. Three of these consumption questions are particularly relevant to this analysis of the impacts of unemployment and EI reform on consumption:

• The first question assesses the direction of the change in household consumption (gone up, gone down, or stayed the same) since the time of the job separation that placed the person in the COEP survey.
• The second question gives an estimate of the monthly amount of the change in consumer spending.
• The last question asks: "In the past four weeks, what was the total income, before deductions, from all household members?" This information will be useful in determining the magnitude of the change in consumer spending as a proportion of household income on a monthly basis.

It is important to emphasise that these questions refer to the month of the survey, which is conducted approximately one year after the job loss.

Using the COEP data for the pre-EI period (i.e., 1995 Q3 to 1996 Q2) and post-EI reform (i.e., 1997 Q1 to 1997 Q4), the analysis presented in this monitoring report initially uses tabulations to identify which individuals are more likely to experience a decrease in consumer spending. Tabulations are also used to compare the average size of their declines in spending and to begin examining the impact of EI reform.

In the latter part of the report, regression techniques are used to test the initial results and to further examine changes associated with EI reform.

Footnotes

1	For more details on the COEP, see the report entitled COEP as a Tool for Legislative Monitoring and Evaluation.