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The Employment Insurance (EI) Act, which came into force with the passage of Bill C-12 in June 1996, was the most fundamental restructuring of the Unemployment Insurance program in the past 25 years. Such substantial changes are likely to affect the behaviour of many people. Given the variety of provisions contained in the Bill, various demographic groups are likely to be impacted differently and to different extents by these changes.

This research uses the fact that the implementation of Bill C-12 proceeded in two separate phases. With each phase being separated by a full quarter, it was possible to estimate the impact of each by quasi-experimental methods using appropriate Canadian Out of Employment Panel (COEP) surveys. Furthermore, given the numerous surveys available, it was also possible to provide two separate estimates of the total impact of Bill C-12. One of the estimates relied on surveys that were relatively close to the implementation date of the Bill. We have thus investigated whether strategic behaviour could be detected in the data. If unaccounted for, such behaviour can seriously bias the parameter estimates obtained from quasi-experimental methods.

In general, the econometric results indicate that the new EI legislation has had a negative impact on the duration of both the unemployment spells and the benefits recipiency spells. On the other hand, various demographic groups have reacted differently to the new provisions. When focusing on the duration of unemployment spells we find that men have shortened their spells considerably more than women, and that part-time workers have reacted similarly compared to full-time workers. On the other hand, young workers do not seem to have reacted to the new provisions, whereas seasonal and non-seasonal workers have adjusted their behaviour similarly.

Although the results using the duration of benefits recipiency usually agree with those using the duration of unemployment spells, it must be stressed that the recipiency durations of women and non-seasonal workers have not been affected by the new provisions of Bill C-12. This is in contrast to the results pertaining to the duration of unemployment spells and has important budgetary implications.

Finally, the data on unemployment spells revealed that a number of individuals have somehow managed to postpone their exit to some extent in order to benefit as much as possible from the Unemployment Insurance (UI) regime and to avoid being penalized eventually if and when they experience another spell. The econometric treatment of such strategic behaviour is not fully satisfactory. It nevertheless allowed us to identify the existence of such behaviour and was sufficient in many cases to reconcile the results from using two different sets of COEP surveys.