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The Impact of EI on Those Working Less than 15 Hours per Week by Arthur Sweetman
 PurposeIn January 1997, the hours-based employment insurance system came into effect. All hours worked now count toward EI eligibility and entitlement, whereas under UI, individuals who worked less than 15 hours per week for a single employer were not eligible for benefits. The goal of this study is to:
BackgroundUnder UI, a weeks-based system was used to assess benefit eligibility. Individuals who worked less than 15 hours per week for a single employer were not eligible for benefits in that week, but they also did not have to pay unemployment insurance premiums. The hours-based system under EI means that:
Under the new hours-based system, firms and workers do not have to fall into this "15- hour job" phenomenon. They do not have to adjust their hours of work in order to avoid paying insurance premiums. Likewise, they do not need to increase their work hours beyond the 15-hour mark in order to have their short hours count toward benefit eligibility. The coverage of low-hours jobs under EI implies that a worker can now combine multiple jobs to make a claim for EI benefits; however, the new eligibility threshold of 420-700 hours also implies that an individual on a single job of very low hours may not be able to obtain sufficient hours to be eligible for benefits.
Methodology and Data SourcesThis study is based on data from the Canadian Labour Force Survey (LFS), the Canadian Out of Employment Panel (COEP) Survey, and HRDC administrative data. Eight LFS surveys are used: four before and four following January 1997 (the February and June public release samples from 1995 to 1998). These data permit an analysis of the behaviour and composition of the entire labour force. They are used to analyze the incidence of multiple job holding and the distribution of work hours. The COEP surveys provide information on job separations before and after the introduction of EI. These data are used to estimate the changes in EI eligibility and entitlement. Both descriptive statistics and econometric results are presented. Given the nature of the data, the study was not able to isolate the impacts of EI reform from the influence of other external factors (e.g., control for changing business cycle over time). Thus the results presented primarily trace outcomes associated with the periods before and after the introduction of EI.
Key FindingsDistribution of hours worked in all jobs and new jobs On average, for men there has been a move away from very low-hours jobs to jobs of over 30 hours per week. For those outside the Atlantic region, there appears to have been a small decrease in jobs of fewer than 15 hours per week. There was also a corresponding increase in the proportion of jobs over 30 hours. Women showed a much smaller response. Information on the distribution of hours in new jobs (jobs starting in the month before the survey) before and after the implementation of EI is important. Workers and firms starting new employment relationships might be more adaptable to the UI-EI regime change than workers and firms who agreed on the labour arrangements prior to the policy change. Thus, the new-job analysis might give some indication of the long-run impacts of the legislative change. The findings indicate that there was a drop in job starts between the two regimes. The drop in new jobs of less than 15 hours per week was substantially greater than the drop in new jobs of over 30 hours per week. This suggests that a new job created under EI was less likely to be under 15 hours per week and more likely to be over 30 hours per week. There is some evidence that the move to jobs of longer hours was not only a feature of short duration jobs, but also of jobs that might become longer tenured. Multiple-job-holding pattern There was no observed change in multiple-job-holding for men. Overall, there was also no observable change for women. Nonetheless, there was a small increase in multiple-job-holding for women in industries with high rates of part-time employment (those with greater than 15 percent of employees working less than 20 hours per week). Changes in EI eligibility About 5.1 percent of all job separators who were ineligible for benefits became eligible, while 2.8 percent of all job separators became ineligible. Women and youth under 25 years old were about 2 to 3 percent more likely to gain and lose eligibility than were males or people in other age groups. Among those who gained eligibility, people in the Atlantic provinces were 3 to 4 percent more likely to do so, and among those who were disqualified, those from this region were less likely to do so. Changes in entitlement There was a slight decrease in overall entitlement of about 0.3 weeks. When the decrease in maximum benefit entitlement from 50 weeks to 45 weeks was taken into account, entitlement increased on average by 0.4 weeks. Entitlement change differed by gender, with men getting 2.2 weeks more than women did. More highly educated workers lost about a week more than did less educated workers. Prime-aged workers received 1.7 weeks more entitlement than did older workers.
Conclusions
Biographical noteArthur Sweetman is Assistant Professor of Economics at the University of Victoria. His research interests include econometrics and cover many areas of labour economics, including unemployment insurance, unions, discrimination, education, immigration, and displaced workers. He is also a senior researcher with the Research on Immigration and Integration in the Metropolis Centre of Excellence on Immigration. He is a member of the Western Research Network on Education and Training. This brief is produced by Human Resources Development Canada. Copies of this brief and/or the full evaluation report are available from: Evaluation and Data Development Tel: l-888-440-4080 Also available on HRDC Intranet under Evaluation and Data Development (EDD) Site (également disponible en français) SP-AH137B-03-00E
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