The Impact of the Unemployment Insurance Reform of 1990 on Single Earners

Abstract

This paper uses estimated labour-supply functions to predict behavioural responses and hence changes in the level and distribution of income resulting from the 1989 reform of the Unemployment Insurance (UI) program. The focus of the paper is on changes in the UI eligibility provisions and benefit structure. Predicted labour-supply responses to the proposed policy changes are very small. This is due to highly inelastic estimated labour-supply functions as well as to the recognition that quantity-constraints from the demand-side of the labour market can limit possible labour-supply.