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In this section we estimate the effect of Bill C-17 on the number of weeks of UI benefits to which a "new" job loser, in a given province or industry, is entitled. In practice, of course, individuals do not always use all the weeks of UI to which they entitled, as they tend to find new jobs before their UI eligibility expires. The effects of C-17 on the number of weeks of UI actually claimed is examined in Section 5; however it seems clear that the number of weeks of UI workers know they can count on, given they experience a job loss, is an important quantity to them, and it is this quantity we focus on in this section.3 Our analysis of the effects of Bill C-17 on workers' UI entitlements is divided into three subsections. The first of these presents estimates of the distribution of eligibility losses per separation, both overall and by province, industry and gender, that would be caused by Bill C-17 if workers and firms were unable to make any behavioural adjustments to the Bill at all. The second presents evidence that some behavioural adjustments in qualifying weeks were in fact made in response to the Bill: as we shall see, some workers, especially in the Atlantic provinces, were able to accumulate enough extra weeks of work to avoid what would otherwise be quite substantial reductions in UI entitlements. The final section presents estimates of eligibility losses, by province, industry and gender, that take into account workers' (and firms') behavioural responses to the Bill. As mentioned, at various points in the section, we shall present our estimates of eligibility losses for three different "populations": per UI claim, per job separation, and per person employed in a given industry or resident in a given province. 1. Effects of Bill C-17 on UI entitlements if Suppose that, after the introduction of Bill C-17, the entire distribution of ROE qualifying weeks among workers who experience a job separation remained the same in all regions of the country. Suppose also that local unemployment rates remained at exactly their pre-C-17 levels. How many fewer weeks of UI benefits would the average worker starting a UI claim, or losing a job, be entitled to? And how does this loss vary by province, industry and gender? Answers to these questions are provided in Figure 2, and Tables 4-8. As outlined in the last section, all the numbers presented there were calculated by applying the C-17 rules to the entire distribution of qualifying weeks for each specified unit of analysis, disaggregated by province, industry and sex, in our "pre-C-17" window period, defined earlier. Claim based unit of analysis Eligibility levels and losses per UI claim are presented in Tables 4 and 5. It is worth noting that, as discussed earlier, the initial eligibility levels in these tables are calculated from the distribution of status vector insured weeks among all workers who claimed UI before Bill C-17, and that the losses ask how many fewer weeks of UI this group of workers would receive if C-17 had been applied to them. The numbers therefore include not only the eligibility losses of workers with initial insured weeks of 12 or more, but also the large losses due to the disentitlement of workers with only 10 or 11 weeks of insured employment in high-unemployment regions. According to Tables 4 and 5, if workers were not able to make any behavioural changes to adjust to the new Bill, the average worker starting a UI claim in Canada would be entitled to about 10 fewer weeks of benefits as a result of Bill C-17. In both historical and percentage terms, this is a very large cut in the duration of benefits, amounting to slightly under one quarter of the initial mean entitlement of about 44 weeks. Surprisingly perhaps, both the pre- and post-C-17 UI entitlements of men and women are very similar; there thus appears to be very little gender differential in the impact of the Bill on individuals' UI entitlements. Tables 4 and 5 also disaggregate these overall losses by industry and province respectively. In this regard both tables share an interesting feature: there is much more variation in UI entitlements across provinces and industries after C-17 than before it. In fact, a reasonable summary of the two Tables could run somewhat like this: Before C-17, a average worker initiating a UI claim was entitled to a little over 40 weeks of benefits, regardless of which province he or she lived in, regardless of which industry he or she worked for, and regardless of gender. (There is some cross-industry and cross-province variation, but only one provincial number — 38.9 for women in Saskatchewan,— and only one industry number — 39.4 for men in agriculture — are below 40 weeks.) After C-17 (absent behavioural adjustment), entitlements vary much more across provinces and industries, with those provinces and industries with the least stable employment patterns (i.e. the highest fraction of workers with low ROE qualifying weeks — below 12) experiencing the biggest drops. These are the provinces of Newfoundland, PEI, New Brunswick and (to a lesser extent) Nova Scotia, and the industries of fishing, forestry and agriculture.4 Workers in the fishing industry, if not able to make behavioural changes to avoid them — an issue we explore in the next subsection — would experience especially massive average losses in UI eligibility of 25 to 26 weeks due to Bill C-17. Much of this comes from those with 10 or 11 weeks of work who are completely disentitled.  View Figure 2 View Table 4
Separation based unit of analysis Tables 6 and 7 give the distribution of mean eligibility losses per job separation, also by industry and province. As mentioned, in these Tables we calculate qualifying weeks using information from individuals' ROE forms, combining them where necessary. Since not all workers experiencing a separation claim UI, the total entitlements per separation, both before and after the change, are lower. Largely because of this "scale" effect, the mean C-17-induced losses are lower too, at 7.7 weeks for women and 8.0 weeks for men. Aside from this overall difference in magnitude, the pattern of eligibility losses across industries and provinces, absent behavioural adjustment, is the same whether these losses are calculated on a per-claim, or a per-separation basis. Person based unit of analysis A final perspective on the distribution of UI eligibility losses before any behavioural adjustments is provided in Table 8 and Figure 2, which in contrast to the means shown in Tables 3 to 7, show the entire distribution of eligibility losses for the country as a whole (Figure 2 shows the entire distributions of UI eligibility per separation before and after C-17; Table 8 shows the entire distribution of the difference between these two, i.e. losses). Together, Table 8 and Figure 2 show that both the initial mean entitlements, and the 10 week mean drop in entitlement shown in Tables 6 and 7, are means of distributions that are either highly asymmetric, or bimodal, or both.5 According to Figure 2, by far the most common UI entitlement for both men and women before the introduction of Bill C-17 was the maximum one, of 50 weeks: around 40 percent of all workers starting a UI claim could count on a full 50 weeks of benefits, if they needed them. After Bill C-17, this changed dramatically, with less than 10 percent of all claimants qualifying for a full 50 weeks. Further, about 5 percent of those who would have qualified for UI before the introduction of C-17 would have insufficient weeks of work to qualify for UI at all under C-17, thus earning an entitlement of zero weeks. This small group of "totally disentitled" workers would experience — remember this is in the absence of any behavioural changes — a huge loss in entitlement, as is shown in Table 8. If there were no behavioural responses to Bill C-17, Table 8 shows that only 9.1 percent of women, and 7.7 percent of men starting UI claims would face no reduction in weeks of UI eligibility. A further 86.1 (95.3-9.1) percent of women and 87 percent of men would experience losses of from 1 to 16 weeks, as a result of the lower entitlements in the new law. Finally, about 5 percent of both women and men would experience massive losses as their work history would now be insufficient to qualify for UI. Thus, while we focus on mean eligibility losses in much of this paper, especially in our summaries of which provinces and industries lost most, it is important to bear in mind that these means can come from quite bimodal distributions in which a minority of workers may experience massive losses. View Table 6
In sum, our analysis of what the effects of Bill C-17 would be on individuals' UI entitlements, in the absence of any behavioural responses to the Bill, shows the following. First, the mean loss in weeks of UI entitlement would be about 10 weeks per UI claim, or 8 weeks per job separation. Second, the distribution of these losses is bimodal, with the great bulk of workers experiencing losses of 1 to 16 weeks, but a small minority —those with sufficient weeks to qualify under the old rules but insufficient to qualify under the new— experiencing total UI disentitlement, with losses of 36 to 40 weeks of benefits. Third, — again before any behavioural adjustments are made — these losses are quite unevenly distributed across industries and provinces, with those provinces and industries where workers have the least stable employment histories (roughly the Atlantic provinces, and fishing, forestry and agriculture) experiencing the largest losses. The C-17 changes appear to have been designed to penalize unstable employment histories, and in this respect appear to have succeeded. 2. Behavioural changes in qualifying weeks One way for workers and firms to mitigate the effect of the eligibility cuts documented above, on both their UI eligibility and overall financial well being, is to accumulate more qualifying weeks of work. In this subsection we explore various pieces of evidence to see whether such changes did in fact occur, where they occurred, and how big they were. We begin our analysis with Tables 9 through 12 and figures 3 and 4, which show the distribution of work weeks that can be used to qualify for UI before and after Bill C-17. (Figures 3 and 4 simply present in graphical form the portions of Tables 9 to 12 that apply to up to 26 weeks of work). Given the lack of a one-to one correspondence between job separations and UI claims noted in the last section, Tables 9 to 12 present three different estimates of the distribution of qualifying weeks. The counts of "all insurable week" are derived from individual ROE's, and simply report the total number of work weeks available from all ROE's. "Insurable weeks used to claim" are calculated the same way, but count only those ROE's, not aggregating short jobs, the individual eventually used to establish a UI claim.6 Finally, "status vector insurable weeks" are derived from UI claim information, i.e. from the "status vector" file, and not from ROE's. These count the total number of work weeks (potentially from multiple ROE's) used to establish each UI claim, from which the individual's UI entitlement in that claim is calculated. Because these are based on claimants only, they only contain total weeks in excess of the minimum qualifying level before and after the policy change. Tables 9 through 12, and Figures 3 and 4, show the following. First, an astonishing share (at least to us) of jobs lasting less than the minimum number of weeks needed to qualify for UI are eventually used, presumably by being combined with other jobs, to qualify for UI anyway. In window 1, the share of these "very short" jobs that eventually are used to qualify for UI is 63 percent (18.47/29.20) for women, and 79 percent (21.89/35.19) for men. Among other things, this suggests that analyses of the incentive effects of UI on employment durations that are based purely on the duration of individual jobs, such as Christofides and McKenna (1996) and Green and Riddell (1997), may be picking up only a small fraction of those effects: having a job that lasts less than minimum qualifying weeks does not, by any means, preclude one from qualifying for UI in Canada. Second, in all three distributions examined, and for both women and men, there is a clear "spike" at the minimum number of weeks needed to qualify for UI in the highest unemployment rate regions in Canada before the introduction of Bill C-17 (10 weeks).7 This spike is consistent with some individuals and firms having enough control over the number of weeks they work per year to accumulate exactly the minimum number of work weeks needed to establish a UI claim. Third, while it is clearly present, this spike at 10 weeks, which is an important number in terms of the UI system only for those Canadian workers in UI regions where the local (3 month moving average seasonally adjusted) unemployment rate is greater than 15 percent, does not represent a large fraction of the Canadian labour force as a whole. Focusing for example on women's SV insured weeks in Table 9 (none of the other cases are very different), only 3.4 percent of all UI claims nationwide are established with just the minimum number of weeks needed to qualify in high-unemployment regions (10 weeks). Only about 14-16 per cent were established with fewer than 20 SV insured weeks, which was the highest possible minimum qualifying weeks, for regions with unemployment rates below 6 percent. (In the period in question the regional three month moving average seasonally adjusted unemployment rates used to administer the UI system ranged from below 6 percent to over substantially 16 percent). Fourth, while this spike is small, it does move when the UI system changes, exactly as predicted by a simple incentive argument: after the introduction of Bill C-17, the spike is found at 12 weeks, the new qualifying minimum, rather than 10 as before. Both clearly show a small spike at 10 weeks before the introduction of Bill C-17, which moves to 12 weeks after C-17. Interestingly there also appears to be a robust spike at 20 weeks, which does not move when the legislation changes.
View Figure 3 View Figure 4 Together, we take Tables 9 to 12 and Figures 3 to 4 as evidence that some individuals are able to alter their distribution of qualifying weeks in response to the legislation, in a way that would mitigate the effect of the C-17 cuts on their UI eligibility. While this number appears to be small on a national level, it may be significant in particular provinces and industries, an issue turn to now. To address this issue, Figures 5 to 7 focus on UI regions where the unemployment rate was greater than 14 percent. It is only in those regions where the minimum qualifying weeks rose from 10 to 12 as a result of Bill C-17. Clearly the spike is now bigger, and moves much more clearly when the legislation changes. The issue of exactly where behavioural changes in minimum weeks of work are likely to be most important is pursued in even more detail in Tables 13 and 14. These Tables give distributions of status vector insured weeks (the total number of weeks on which UI claims are based, observed for UI claimants only, which can result from a combination of more than one job, or ROE), relative to the minimum number of weeks needed to qualify for unemployment insurance (which varies across UI regions according to the local unemployment rate). A value of zero thus indicates that the individual had exactly the minimum number of weeks needed to qualify for UI; positive values indicate more than the minimum number of weeks. The tables compare two high-unemployment regions: Newfoundland, and Northern Ontario (UI region 44). In Newfoundland, the tailoring of work histories to qualify for UI is obvious, both before and after Bill C-17: Before the Bill, fully 26 percent of UI claims established in Newfoundland by both men and women were established on the basis of the minimum possible number of weeks of work. This fraction dropped somewhat, to 18-19 percent after C-17, suggesting that not all of those 26 percent were able to find the extra 2 weeks of work needed to qualify for UI. However, the continued existence of a spike at the new, higher level of qualifying weeks after C-17 suggests that behavioural changes in response to C-17 could have substantially mitigated the effects of this Bill on workers' UI entitlements in that province. View Figure 5 View Figure 6 View Figure 7
Table 14 presents the exact same statistics for the highest-unemployment region in Ontario, UI region 44. Interestingly, during the sample period, the overall unemployment rate in UI region 44 (pre-C-17 the UI regional unemployment rate ranged from 14.3 percent to 16.4 percent; post-C-17 it was between 13.3 percent to 14.6 percent, only in the last month of the period did the regional rate dip below 14 percent) was not that different from that in Newfoundland (pre-C-17 the 3 regions unemployment rates were between 12.7 percent to 27.5 percent; post-C-17 from 11.7 percent to 27.4 percent) in terms of the ranges used in the operation of the UI system. Incredibly, however, the spike seen in Newfoundland is totally absent.8 We conclude that, while high unemployment, and employment in primary industries are important factors, they are not sufficient to explain the tailoring of work histories to the UI system in the Atlantic provinces, especially Newfoundland. Other factors, among them learning effects and the possibility of a "culture of unemployment" must play a role as well. These factors may play an important role in modifying the incidence of Bill C-17, relative to what would occur if no behavioural changes were possible, an issue we turn to now. 3. Estimated effects on UI eligibility allowing for behavioural responses in weeks worked While legislation-induced behavioural changes in qualifying weeks may not be of great importance on the national level, the previous subsection showed that they may be quite important in particular provinces and industries, especially those which are high users of the UI system. The ability of workers to make such behavioural changes could thus have important effects on the pattern of C-17-induced eligibility losses across provinces and industries. To examine that possibility, in this section we present estimates of the incidence of Bill C-17 that incorporate the mitigating effects of these behavioural changes. Tables 15 to 18 present parallel results to those in Tables 5 to 8, which now allow for workers to change their qualifying weeks in response to Bill C-17. In all these Tables, the "post-C-17" numbers were calculated by applying the C-17 rules to the distribution of qualifying weeks that prevailed after Bill C-17 rather than before it, but using the pre-C-17 unemployment rates to make the numbers comparable. Tables 15 and 16 present losses per UI claim, Tables 17 and 18 losses per job separation. Claim based unit of analysis In interpreting Tables 15 and 16, it is important to note that, because they use the "after" distribution of SV insured weeks, the "after" results in these Tables — unlike those in 17 and 18 below or in Tables 5 and 6 — should be interpreted as conditional on claiming UI after the introduction of C-17. Our calculations of the losses in these two tables therefore include reductions in UI entitlements among all individuals who would claim under both legislative regimes, but do not include losses due to the total disentitlement of individuals who would have claimed before C-17.9 They are therefore not directly comparable to Tables 5 and 6, which do include such effects, but they do show the following: even allowing for individuals to change their work behaviour in an environment of modestly improving economic conditions (which should have made it easier to accumulate more qualifying weeks) Bill C-17 still caused the eligibility in average UI claim to fall by about 8 to 8.2 weeks.10 View Table 15
View Table 17
Tables 15 and 16 also share another interesting feature, which is the distribution of eligibility losses across provinces and industries. Unlike Tables 5 and 6, which showed much larger eligibility losses in the Atlantic provinces, and in the fishing, forestry and agricultural industries, the losses are now much more evenly spread across provinces and industries. What this implies is that either almost all of the excess eligibility loss in high-unemployment provinces and industries takes the form of failure to accumulate enough weeks to qualify for UI at all (a factor which is not captured by Tables 15 and 16) or that workers in those provinces were able to make behavioural adjustments in their qualifying weeks of work that largely eliminated the disproportionate effects of Bill C-17 on their UI eligibility. To sort out these issues, we now turn to the distribution of eligibility losses per job separation. Separation based unit of analysis Tables 17 and 18 present the same kind of results as in Tables 15 and 16, but on a per-separation basis. As in Tables 7 and 8 these were calculated from the distributions of ROE weeks, rather than the distributions of status vector insured weeks. Because they condition only on separating from a job and not on actually claiming UI they are directly comparable to their "no behavioural change" counterparts in Tables 7 and 8, and they do incorporate eligibility losses due to a failure to qualify for any UI at all. As suggested by Tables 15 and 16 however, the losses are much more evenly distributed across provinces and industries when behavioural changes are accounted for than when they are not. For example (from Table 7), absent incentive effects on weeks of work, the average job loser in Newfoundland would have lost almost 16 weeks of UI entitlement, more than twice the national average. Once the ability of workers to find extra weeks of work to mitigate the effects of C-17 is taken into account, their losses become essentially equal to the national average of 7.6 weeks.11 While behavioural changes in weeks of work are of limited importance nationwide, we conclude that they can be of major importance in certain regions, and can substantially alter our estimates of who is most hurt by the eligibility cuts in recent UI legislation. In particular, when workers' and firms' efforts to find extra weeks of work to mitigate the C-17-induced cuts are taken into account, the average entitlement loss per job separation after C-17 is not much different in high-unemployment provinces and industries than other provinces and industries. This finding coincides with the observation in the previous subsection that behavioural changes in response to the legislation were much more pronounced in Newfoundland than in other parts of Canada.12 Person based unit of analysis Tables 19 through 22 present a final perspective on the provincial, industrial, and gender distribution of UI eligibility losses engendered by Bill C-17, by expressing these losses in per-worker, or per-capita terms, rather than per job separation or per UI claim. Rather than asking how much the UI eligibility of an average job loser or UI claimant falls, these tables ask the following question: "Given you are employed in a particular industry, or live in a particular province, how many fewer weeks of UI are you likely to become entitled to in a given year as a result of a job loss?" If job losses are more common in certain industries or provinces, workers in those industries or provinces are likely to be hurt more by C-17 simply because they are more likely to lose their jobs in a given year, even if their eligibility losses, conditional on a job loss, are no different from workers elsewhere. The numbers in Tables 19 and 20 are calculated from the "per claim" numbers in Tables 15 and 16, using the ratio of claims per industry in our HRDC data to that of employment by industry in Statistics Canada's Labour Force Survey data for 1993, and the ratio of claims per province to 1993 counts of population.13 Even though, from our previous results, we know that a separating worker could expect roughly the same UI eligibility in all industries before C-17, Table 19 clearly shows that certain industries were still much higher users of the UI system than others because of their much higher separation rates.These high-use industries include construction, fishing and forestry. Interestingly, both before and after C-17, fishing shows extremely high UI use for women (we conjecture many of these are fish plant workers) but not for men, while the opposite is true for construction. Because job loss still a relatively rare event nationwide, Table 19 also shows that the average employed worker lost only about a week of UI entitlement due to Bill C-17. Because certain industries rely much more on layoffs and the UI system, however, workers in those industries lost as much as five times as much, even when behavioural changes to mitigate the effects of C-17 are taken into account. Even after these losses, however, the fishing and forestry industries derive much greater subsidies from the UI system than other industries, as the eligibility losses came from a very high base. View Table 19
View Table 21
Table 20 performs the same exercise as Table 19 except by provinces. Because the losses shown here are now per capita rather than per worker, they are even smaller. Again, since the Atlantic provinces, and to some extent Quebec are much heavier users of the UI system due to their more frequent layoffs, they lose more than other provinces. Even after C-17, however, they benefit much more from the UI system than the rest of Canada. Tables 21 and 22 perform the same exercise as Tables 19 and 20, but on a per separation basis, rather than a per claimant one. Overall, the magnitude of the numbers are somewhat larger since, claimants being a subset of all separations, there are more weeks of eligibility from all separations to be averaged across each province or industry. However, apart from the difference in the level, the pattern across provinces and industries is very similar to that for claimants.
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