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To examine the impacts associated with EI reform, Tables 2 to 6 compare changes in consumer spending before and after EI reform. For this analysis, two twelve-month periods were compared to take seasonality into account. Specifically, COEP data for the third and fourth quarter of 1995 and the first and second quarter of 1996 were used as the pre-EI period. COEP data for the four quarters in 1997 were used as the post-EI reform period.⁵ As noted earlier, the COEP data for each of these quarters consists of a sample of persons who experienced a job separation in that quarter but who were interviewed for the first time approximately one year later.

4.1 Consumption Changes by Length of Unemployment

Tables 2 and 3 present information on the length of unemployment. Table 2 shows that individuals with a job separation but experiencing no weeks of unemployment experienced a slightly greater chance of a decrease in consumer spending following their job loss if they were in the post-EI reform period. By contrast, individuals experiencing unemployment of more than one week following their job separation seem to be somewhat less likely to have experienced a decrease in consumer spending in the post-EI reform period. For example, in the pre-EI period, a decrease in consumption was experienced by about 22 percent of those with more than 52 weeks of unemployment, compared to about 19 percent in the post-EI reform period.

Table 3 compares the average decrease in consumption before and after EI reform for those people experiencing a decrease in consumption. The numbers in Table 3 show the change in consumption as a percent of total household income so that percentage changes can be used to form comparisons between individuals. The actual amount of change in consumption is harder to interpret as a 100 dollars decline per month may mean greater hardship for those with low income than those with high income. The results from Table 3 are mixed but the general tendency is for the drops in income to be greater as spells of unemployment increase.

4.2 Consumption Changes by Types of Households

To examine the possibility of some variation in the support levels over the length of a claim, Table 4 compares the share of EI benefits of total income. In Tables 4 and 5, the impact of EI reform on consumption is explored from the perspective of types of households. These results suggest an overall decrease in the portion of families experiencing a decrease in consumption after EI reform.

Table 4 shows that single parents with children have experienced the largest increase in consumption in the post-EI reform period compared to the pre-EI reform period. Single parents with children experiencing declines in consumption decreased from 17.2 percent before EI reform to 10.0 percent following EI reform. The most significant decrease in declining consumption was observed for single parents with children living alone, which dropped from 21.4 percent in the pre-reform period to 12.6 percent in the post-reform period. Single parents living with others experienced a similar improvement, decreasing their declining consumption from 10.1 percent in the pre-reform period to 6.3 percent in the post-reform period.

The only family type exhibiting a larger decline in the post-reform period than the pre-reform period was single individuals without children. The percentage of single individuals who experienced a decline in consumption increased from 12.2 percent prior to EI reform to 13.4 percent after EI reform.

Table 5 compares the average decrease in consumption before and after EI reform.

• Single parents (living alone) who experience a decrease in consumption reported a smaller decrease as a share of monthly income in the post-EI reform period (from 33.1 percent to 27.6 percent).
• Married individuals without children also experience a smaller decrease in consumption after EI reform (31.2 percent to 27.3 percent with spouse not employed, 18.9 percent to 15.3 percent with spouse employed).
• The most substantial decrease in household consumption is for married couples with children and with an unemployed spouse. The average decrease went from 23.9 percent to 29.1 percent for married workers with non-working spouse and with children.

Footnotes

5	COEP data for the third and fourth quarters of 1996 are omitted as they coincided with the phase-in period for the EI reforms.