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In this paper, the term "consumption" refers to the total amount of spending of the household of the respondent in the month prior to his/her interview date. While this information is a point in time, it still allows for comparisons between different demographic groups. In the majority of cases, COEP respondents (both EI claimants and non-claimants) answer the consumption questions by indicating that there has been no change or that consumption has actually gone up. A high degree of confidence can be placed in this result because similar conclusions were obtained with a previous version of COEP,² which used a different wording of the question. Browning (1998) finds the median expenditure change is zero subsequent to the 1994 UI reform and suggests that it must be a result of individuals running down assets or incurring more debts. As long as the job separation is temporary and expected long-run income is unchanged, individuals may wish to maintain their usual expenditure patterns.

At the same time, the answers to the consumption questions indicate that there is a minority who did experience some decrease in consumer spending following their job loss. Table 1 provides an overview of the characteristics of these persons and their households.

As indicated in Table 1, approximately 12 percent of the COEP respondents experienced a decrease in their household consumption. For those who experienced such a decrease, the average decline in monthly consumption was about 24 percent of their monthly household income at the time of the first interview. Monthly household income is used as a denominator in order to make comparisons possible between individuals.

In many cases, these numbers do not vary by much across the respondent characteristics. Table 1 shows that gender had no real impact. Also, the type of job that was lost (e.g. part-time versus full-time) does not appear to have had a large impact on the share of those who experienced a decrease in consumer spending. As well, the job type does not appear to have had much impact on the magnitude of the average decrease.

Looking at the results by household types, however, it seems that respondents without a working spouse (either single and living alone or married but with an unemployed spouse) are more likely to experience a decrease in consumer spending than other types of households. This is consistent with the idea that when there are other working members in the household, there will be more resources to draw upon to maintain the usual level of consumption. An unpublished evaluation paper by HRDC shows that the new employment of the spouse (after a job separation) has a positive impact on household income, which increases available resources.³

An examination of the effect that household type has on consumption reveals the following:

• Single individuals living alone (with or without children) are the most likely to experience a decrease in household consumption expenditures as compared to all other types of household (17.1 percent for single parents and 16.8 for singles). The average decrease in consumption as a percent of total income is among the highest at approximately 30 percent for these groups (31.1 percent for single parents and 27.8 percent for singles).
• 13.8 percent of couples without children and with one unemployed spouse decrease their consumption after the job loss. The average decrease in monthly consumption is at 29.2 percent.
• Those with a working spouse (with or without children) decrease their consumption by less than 20 percent of household income. The share of individuals decreasing their consumption in these two groups is also among the smallest at about 10 percent.

Examination of the effect of the length of time of unemployment also yields two useful observations:

• Some of those who did not experience a period of unemployment after a job loss (e.g. moved directly into another job) still experienced a decrease in consumption.⁴ For this group, the average decrease was about 20 percent of household income. This finding points to the probability for household spending patterns to vary as a result of natural fluctuations from one year to another or reduced expectations of long-run income. While the analysis of household spending will proceed without further treatment of this issue, the reader can take into account that the other rows must be interpreted with this number in mind.
• The fraction of those who reduced their consumption does not rise substantially until the person has been unemployed for more than 52 weeks. About 21 percent of those unemployed for more than 52 weeks experienced a decrease in consumer spending, with the average decrease corresponding to about 27 percent of household income.

By employment type, seasonal workers are less likely to experience a decrease in consumption (8.4 percent) as compared to other (non-seasonal) workers (12.2 percent). For those seasonal individuals who do experience a decrease, the magnitude of the decrease is 21.3 percent of household income as opposed to 24 percent for non-seasonal workers.

Footnotes

2	EKOS Research Associates Inc. carried out the first version of the 1993 COEP Survey. The 1995 and 1996 versions of COEP were carried out by Statistics Canada on behalf of HRDC. See Martin Browning, "Income and Living Standards During an Unemployment Spell, EDD, May 1998", page 24, for more details.
3	See Ahmad, N., W. Lo, T. Siedule and G. Wong, Family Income Dynamics after a Job Separation, EDD, May 2000, p.18.
4	A similar result was found in the EI evaluation Job Quality of Displaced Workers. This report found that there was a drop in wages between the old job at the time of the ROE and the new job.