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Bill C-12 introduced a large number of legislative changes, relative to the piecemeal changes to UI introduced earlier in the 1990s. Accordingly, the move from UI to EI is a major one. Of particular interest for the present study, EI-Part I involved both new insurance elements — the average earning calculation, the divisor rule, the intensity provisions and related work credit rules, and the family income supplement — as well as modifications of existing UI parameters — the move to an hours-based system, the change in new entrant and re-entrant entrance requirements, the drop in maximum benefit duration, and the reduction in maximum insurable earnings. Of course, when many factors change at the same time, there may be difficulty in disentangling the individual effects of each change, especially if the principal method of empirical analysis follows a natural experiment methodology. In practice, some of the EI changes were immediate, becoming effective in mid-1996, some were implemented at the start of 1997, and some, though introduced in mid-1996, will only become fully operational after several years of tracking of EI usage has taken place.

For present purposes, the main consequence of this gradual phase-in of EI is that one might expect different effects in the early period of EI coverage than subsequently. Operationally, the data we employ concern individuals with job separations in four calendar quarters of the UI system (1995Q3, 1995Q4, 1996Q1, and 1996Q2), two quarters of the initial phase-in (1996Q3 and 1996Q4), and four quarters of the period of fuller EI coverage (1997Q1, 1997Q2, 1997Q3, and 1997Q4). Individuals with separations in these various calendar quarters are labelled as being in cohorts 1-10. Cohorts 1-4 cover job separators under the UI system; cohorts 5-6 include individuals with job separations during the EI phase-in period; and cohorts 7-10 consist of job separators under the fully implemented EI system. However, one should note that, in view of the long-term effects of some of the EI provisions, such as the intensity rule, assessment of the importance of these long-term consequences will require data several years after the start of EI.