The redistributional impact of Canada's Employment Insurance Program, 1992–2002

Area of Science:

• Economics
• Public Policy
• Labor Economics

Background:

• Canadian income support programs, particularly Employment Insurance (EI), underwent significant reforms in the 1990s.
• This period coincided with a deep recession followed by strong economic growth in Canada.

Observation:

• The study analyzes the evolution of the distributional impact of EI during this transformative decade.
• It examines how changes in EI affected income redistribution for individuals and families.

Findings:

• EI demonstrated strong redistributive effects on individual earnings throughout the 1990s, with a lesser impact on family income.
• Over time, the distribution of EI benefits and contributions became less redistributive.
• Counter-intuitively, both EI benefits and contributions were found to be redistributive, even with a regressive contribution structure.

Implications:

• The findings offer insights into the dynamic nature of social insurance programs and their redistributive capacity.
• Understanding EI's evolving impact is crucial for current policy discussions on unemployment and fiscal sustainability.
• The study highlights the complex interplay between economic conditions, policy reforms, and income inequality.