Abstract
Employment insurance (EI) and social assistance (SA) represent two key income support programs in Canada. The structure of these programs is similar to those found in many countries where unemployed individuals may use a number of sources to fund job-search activities and provide income support during periods of diminished employment income. In this paper, we examine the nature of the interaction between the programs and their overall impact on labor market outcomes. We use the 1997 Canadian Out of Employment Panel data set to examine behavior of a set of individuals following the loss of employment. Results indicate that reductions in the generosity of SA results in lower use of both income support programs. Conversely, if the generosity of the EI program is curtailed this reduces use of the EI program and leads to greater use of the SA program.
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