Evaluation of the Extended Duration of EI Regular Benefits Initiative and the Pilot Project No. 15 Relating to Extended Benefits

Transcription

1 Now and Tomorrow Excellence in Everything We Do Evaluation of the Extended Duration of EI Regular Benefits Initiative and the Pilot Project No. 15 Relating to Extended Benefits Final Report Strategic and Service Policy Branch SP E

2 Evaluation of the Extended Duration of Employment Insurance Regular Benefits Initiative and the Pilot Project 15 Relating to Extended Benefits This publication is available for download at canada.ca/publicentre-esdc. It is also available upon request in multiple formats (large print, Braille, audio cassette, audio CD, e-text diskette, e-text CD, or DAISY), by contacting O-Canada ( ). By teletypewriter (TTY), call Her Majesty the Queen in Right of Canada, 2016 For information regarding reproduction rights: droitdauteur.copyright@hrsdc-rhdcc.gc.ca PDF Cat. No.: Em20-54/2016E-PDF ISBN : ESDC Cat. No.: SP E

3 TABLE OF CONTENTS TABLE OF CONTENTS... ii LIST OF ACRONYMS... iv LIST OF TABLES... iv LIST OF FIGURES... v EXECUTIVE SUMMARY... vi MANAGEMENT RESPONSE...viii 1 INTRODUCTION OVERVIEW DESCRIPTION AND TIMELINE OF INITIATIVES EXTENDED DURATION OF EMPLOYMENT INSURANCE REGULAR BENEFITS (EDB) PILOT PROJECT NO EVALUATION APPROACH FINDINGS EXTENDED DURATION OF EMPLOYMENT INSURANCE REGULAR BENEFITS FINDINGS ESTIMATED EDB BENEFITS PAID ADDITIONAL ENTITLEMENT IMPACT ON CLAIMANTS BEHAVIOUR... 6 BENEFIT USAGE... 6 BENEFIT EXHAUSTION PILOT PROJECT RELATING TO EXTENDED BENEFITS (PILOT PROJECT NO. 15) FINDINGS ESTIMATED PILOT 15 BENEFITS PAID IMPACT OF ADDITIONAL ENTITLEMENT ON CLAIMANTS BEHAVIOUR, IN PARTICULAR ON SEASONAL CLAIMANTS... 9 BENEFIT USAGE ALL CLAIMS IN PILOT 15 REGIONS... 9 BENEFIT USAGE SEASONAL INCOME GAPPERS IMPACT OF TERMINATION TRIGGER IN PILOT ii

4 4 CONCLUSIONS BIBLIOGRAPHY APPENDIX A PILOT REGIONS APPENDIX B - WEEKS OF ENTITLEMENT BY REGIONAL RATE OF UNEMPLOYMENT FOR NON-PILOT REGIONS AND NO-EXTENSION PERIOD APPENDIX C - WEEKS OF ENTITLEMENT BY REGIONAL RATE OF UNEMPLOYMENT FOR PILOT REGIONS APPENDIX D - WEEKS OF ENTITLEMENT BY REGIONAL RATE OF UNEMPLOYMENT FOR EDB PERIOD APPENDIX E EVALUATION MATRIX APPENDIX F DATA, DEFINITIONS AND METHODOLOGY F.1 LINES OF EVIDENCE F.2 DATA SOURCE AND RESTRICTIONS F.3 DEFINITIONS F.4 METHODOLOGY iii

5 List of Acronyms Best 14 Week EDB EEILTW EI LTW MAR NERE Calculating Benefit Rate Based on Claimant s 14 Highest Weeks of Insurable Earnings Pilot Projects Extended Duration of Employment Insurance Regular Benefits Extension of EI Regular Benefits for Long-Tenured Workers Employment Insurance Long Tenured Workers EI Monitoring and Assessment Report Pilot Projects Providing Increased Access to Employment and Unemployment Benefits for New Entrants and Re-entrants Pilot Projects Pilot 10 Extended EI Benefit Pilot Project (Pilot Project No. 10) Pilot 15 Pilot Project Relating to Extended Benefits (Pilot Project No. 15) Pilot 6 Increased Weeks of EI Pilot Project (Pilot Project No. 6) SV WWC Status Vector Working While on Claim List of Tables TABLE 1 : EXTENDED DURATION OF EI REGULAR BENEFITS ANALYSIS... 5 TABLE 2: EXTENDED DURATION OF EI REGULAR BENEFITS ADDITIONAL WEEK TAKE-UP RATE... 6 TABLE 3: PILOT 15 BENEFITS ANALYSIS... 8 TABLE 4: PILOT 15 ADDITIONAL WEEK TAKE-UP RATE... 9 TABLE 5: PROFILE OF SEASONAL CLAIMANTS AND GAPPERS IN THE PILOT 15 REGIONS TABLE 6: CLAIM PROFILE TABLE 7: SEASONAL BENEFICIARIES AND GAPPERS IN PILOT REGIONS DURING PILOT TABLE A. 1: EI ECONOMIC REGIONS INCLUDED IN EXTENDED BENEFITS PILOTS TABLE B.1: ENTITLEMENT WEEKS FOR NON-PILOT REGIONS AND THE NO-EXTENSION PERIOD TABLE C.1: ENTITLEMENT WEEKS FOR PILOT REGIONS TABLE D.1: ENTITLEMENT WEEKS FOR THE EXTENDED DURATION OF EI REGULAR BENEFIT PERIOD TABLE E. 1: EVALUATION MATRIX TABLE F. 1: SEQUENCE OF PILOT PROJECTS AND EI INITIATIVE RELATED TO 5 WEEK EXTENSIONS TABLE F. 2: SOCIO-ECONOMIC COVARIATES iv

6 List of Figures FIGURE F2: GAPPERS' DEFINITION v

7 EXECUTIVE SUMMARY This report presents the evaluation findings of the Extended Duration of Employment Insurance Regular Benefits (EDB) and the Pilot Project Relating to Extended Benefits (Pilot 15). Both initiatives extended the EI regular entitlement by five weeks. However, each initiative had different policy objectives. The first EDB policy objective was to stimulate spending considering the uncertainty of the 2008/2009 economic downturn. Its second objective was to reduce EI exhaustion rate. The EDB extended EI regular benefit entitlement nationwide by five weeks and increased the maximum entitlement to 50 weeks from 45. The EDB initiative received Royal Assent on March 12, 2009 and came into effect on March 1, It concluded on September 11, Pilot Project No. 15 was a two-year pilot project reintroducing Pilot Project No. 10 with the objectives of testing the impact of extending the number of weeks of benefits in economic regions of relatively high unemployment during a period of economic recovery to reduce the number of seasonal workers facing an income gap and assessing the impact of a regional unemployment rate-based automatic termination trigger. Pilot 15 was in effect in 21 EI economic regions where the unemployment rate was 8% or, from September 12, 2010 to September 15, The automatic termination trigger provision excluded threes regions from the pilot since their unemployment rates dropped below 8% for 12 consecutive months. Evaluation Approach This evaluation report is primarily based on the technical study Extended Duration of EI Regular Benefits: Evaluation Technical Study (ESDC, 2015), which is a descriptive and econometric study of a sample of completed EI claims where only regular benefits were paid. For both initiatives, the evaluation examined the take up by EI claimants of the additional weeks of benefits provided and the impact on the length of EI claims as well as on the likelihood of exhausting entitlements and benefits during the pilot periods. An analysis of the total benefits paid associated to the additional weeks of entitlement was conducted for both initiatives. Although the assessment of the macro-economic impact of the EDB initiative was in scope of this evaluation, the total benefits paid analysis provide an estimate of the direct spending stimulus of the EBD initiative. In the case of Pilot 15, the evaluation explored the extent to which the pilot helped address the income gap issues related to seasonal workers in the pilot regions and the vi

8 effectiveness of the termination trigger provision. Evaluation Findings The evaluation provides key findings on the EDB initiative and Pilot Project 15. The evaluation found EDB to be successful in that the initiative provided an estimated spending stimulus of 2.5 billion dollars between March 9, 2008 and September 11, 2010 for which 57% ($1.41 billion) is attried to the additional EDB weeks paid and 43% ($1.09 billion) is attried to increased use of regular entitlement among all EI claimants. The EDB initiative resulted in 34% of regular claimants using additional benefits, of which 76% used the entire additional 5 weeks. In addition, the EDB initiative allowed all claimants, only claimants who used the additional weeks, to remain on EI for 1.6 weeks longer on average and to reduce entitlement benefit exhaustion by 5.3 percentage points. Results for Pilot Project No. 15 are mixed. Pilot Project No. 15 met its goal of reducing the number of seasonal workers facing an income gap with a 3.3 percentage point probability decrease and also led to a decrease of the income gap length of seasonal income gappers of 2.2 weeks on average. However, only 3.2% of the total 558 million of additional benefit paid during Pilot 15 period was used by seasonal income gappers. This indicates that although Pilot Project No. 15 improved the situation of seasonal gappers, the measure was too broad for the stated goal. Further, based on the facts that claimants exhaustion of benefits and number of weeks used were similar before and after the trigger, the regional termination trigger included with Pilot 15 was found to be successful both in its timing and design. vii

9 Management Response Background The testing of increasing the number of weeks of benefits available to some claimants began with EI Pilot Project No. 6. Pilot 6 was introduced for a two-year period in 2004 in 24 regions. The pilot was re-introduced as a new pilot project, Pilot Project No. 10, for a period of 18 months in 21 regions in 2006 and was extended in 2007 for a further period of 18 months until May 31, Both pilot projects tested the costs and impact of extending the number of weeks of benefits in selected economic regions. specifically, they tested whether providing weeks of benefits would reduce the number of seasonal workers facing an income gap with neither EI benefits nor employment income (referred to as gappers ), and whether there would be associated behavioural effects. Pilot 10 ceased to have effect in February 2009 during the economic recession, when the EI Act was amended via the Budget Implementation Act, 2009 to introduce the Extended Duration of Employment Insurance Regular Benefits (EDB). Extended Duration of Employment Insurance Regular Benefits (EDB) The EDB was intended as a temporary stimulus measure as part of a broader response to the recession of 2009 and to reduce EI exhaustion rates during the recession. EDB temporarily provided additional support to unemployed workers facing transitions in tough economic times by providing claimants with five additional weeks of benefits. In addition, the maximum duration of benefits available under the EI Program in regions of high unemployment has been increased from 45 weeks to 50. The temporary measure came into effect on March 1, 2009, with extra weeks available to individuals who had an open claim on March 1, 2009, and were still unemployed. EDB concluded on September 11, 2010 and was followed seamlessly by Pilot 15. EI Pilot Project No. 15 Pilot Project No. 15 was based on the same parameters and included the same economic regions as Pilot Project No. 10, and allowed further testing through a period of economic recovery. In addition, it tested the impact of a regional unemployment rate-based trigger, which removed some participating regions from the pilot when their regional unemployment rate fell below 8% for 12 consecutive months. specifically, the pilot ended on September 24, 2011 in St. John s (Newfoundland and Labrador); on March 24, 2012 in Chicoutimi-Jonquière (Quebec) and on June 23, 2012 in Sudbury (Ontario). The pilot ran until September 15, 2012 and was allowed to sunset at that time. viii

10 Considerations The EDB and subsequent Pilot 15 were introduced in different economic periods with different policy objective: the first one in a time of recession and the second one in a time of recovery. This could explain the broad assistance beyond the seasonal gappers that the evaluation rightfully points out for Pilot 15, may also put the cost of the initiatives into perspective, as Pilot 15 was seen as a stimulus measure. In addition, a number of EI pilots were in force during the EDB and Pilot 15 which were intended to change claimant s behavior both on and off claim. These include the Best 14 Weeks, Working While on Claim, and NERE pilots. While this report controls for all of these pilots, the changing parameters within each pilot complicates the analysis over time. It is also important to remember other key differences between the EDB and Pilot 15. Specifically, the EDB was available nationally and increased the maximum insurable weeks from 45 to 50 weeks. The report does reflect these differences and this is only pointed out here for further emphasis. Finally, the inclusion of an unemployment based trigger in Pilot 15 s design was a first and the Skills and Employment Branch is pleased that the evaluation finds that termination trigger was successful in terms of its timing and design. Key Conclusions The Skills and Employment Branch welcomes the findings in the report and since EDB and Pilot 15 both were temporary measures with different policy objectives, no overall recommendations are made. The evaluation points out that both initiatives were successful in terms of reducing the entitlement exhaustion rate. However, this came at a cost as the increased use of benefits was observed among all claimants, just among those who used additional weeks of benefits. As discussed in the considerations section, the wide reach of the assistance was part of stimulus package in response to a recession. The Branch also appreciates the lessons learned from the evaluation with regard to the testing and evaluation of the unemployment rate based trigger. ix

11 1 Introduction 1.1 Overview This report presents the findings of the evaluation of the Extended Duration of Employment Insurance Regular Benefits (EDB) and Pilot Project Relating to Extended Benefits (Pilot 15). These are two successive Employment Insurance (EI) initiatives geared towards increasing EI entitlement for Canadians filing regular benefit claims, each with different policy objectives. Budget 2009 introduced several stimulus measures designed to soften the effect of the economic downturn on Canadians. A number of measures were geared specifically towards workers who experienced job separations during that period and were expected to experience job market impacts due to the decrease in labour demand and tightening labour market conditions. One of those measures was the EDB. Following the downturn, Pilot Project No. 15 was introduced to test the impact of extending EI benefits during a period of economic recovery for seasonal claimants who regularly face income gaps after exhausting their EI claim. 2 Description and Timeline of Initiatives 2.1 Extended Duration of Employment Insurance Regular Benefits (EDB) The EDB was introduced and implemented nationwide as a response to the 2008/2009 economic downturn. Between May, 2008 and August, 2009, the overall Canadian unemployment rate increased from 6.3 to 8.7 percent. It was expected that the average duration of unemployment would likewise increase. The initiative had two policy objectives: 1) to stimulate spending; and 2) to reduce EI exhaustion rate. specifically, the rationale for the initiative as stated in the 2009 Budget plan was to respond to a need for additional support in uncertain times, and to: provide all regular EI clients with the reassurance that they will have financial support for a longer period while they find new employment, should it be required. It will also provide additional income support to unemployed Canadians who would otherwise have 1

12 exhausted their benefits. 1 EDB received Royal Assent on March 12, 2009 and came into effect on March 1, It extended EI entitlement by five weeks and increased the maximum allowable EI entitlement from 45 to 50 weeks. The extended benefits applied retroactively to EI claims with benefit periods that did end prior to March 1, 2009 (i.e. for claims established as early as March 9, 2008) to claims established up to September 11, Depending on their insurable hours of employment and the unemployment rate in their regions of residence; some claimants received the additional benefit entitlement after exhausting their original entitlement and prior to finding employment. 2.2 Pilot Project No. 15 Pilot Project No.15 was a two-year re-introduction of Pilot Project No 10. Pilot No.10 was established for the purpose of testing the costs and impact of extending the number of weeks of benefits in 21 economic regions of relatively high unemployment. specifically, it tested whether providing five additional weeks of benefits would reduce the number of seasonal workers facing a gap between the exhaustion of their EI benefits and the resumption of their seasonal employment income and whether there would be associated behavioral effects. Pilot Project No.15 was introduced from September 12, 2010 to September 15, 2012 based on the same parameters and included in the same 21 EI economic regions (see Appendix A Pilot Regions), as the previous Pilot Project No.10 to allow for further testing during a period of economic recovery as well as to assess the impact of a regional unemployment rate-based automatic termination trigger. The automatic termination trigger provision excluded regions from the pilot if their unemployment rate was below 8% for 12 consecutive months. 2 The three excluded EI regions and the date of exclusion are as follows. St. John s, excluded from Pilot 15 on September 24, 2011 Chicoutimi-Jonquiere, excluded from Pilot 15 on March 24, 2012 Sudbury, excluded from Pilot 15 on June 23, 2012 Pilot 15 terminated for the remaining 18 regions on September 15, Budget 2009, p Canada Gazette - Vol. 144, No October 27,

13 2.3 Evaluation Approach This evaluation report is primarily based on the technical study titled: Extended Duration of EI Regular Benefits: Evaluation Technical Study (ESDC, 2015). A comprehensive discussion on the methodologies as well as detailed econometric results can be found in the technical study. Also, for an overview of the methodology, see Appendix F Data, Definitions and Methodology. The econometric analysis used for this report takes into account and controls for a number of temporary EI measures in effect during the EDB and the Pilot 15 initiatives. These temporary EI measures included: The Extension of EI Regular Benefits for Long-Tenured Workers (EEILTW) which provided, in addition to the EDB, further entitlement in the number of weeks of regular benefits to claimants who had drawn on benefits extensively in the previous five years, a group of claimants referred as long-tenured workers (LTW). The EEILTW provided up to 20 weeks of additional regular benefits for claims established between January 4, 2009, and September 11, Calculating Benefit Rate Based on Claimant s 14 Highest Weeks of Insurable Earnings Pilot Projects (Pilot Projects Nos. 7, 11 and 16) which were implemented between October 30, 2005 and June 23, Under the Best 14 Weeks pilots, the average weekly earnings were determined by taking the average of the highest or best 14 weeks of insurable earnings that fell during the qualifying period. 1 If a claimant accepted additional weeks of work beyond the 14 weeks at a lower salary, the level of EI benefits would remain the same. Pilot Projects Providing Increased Access to Employment and Unemployment Benefits for New Entrants and Re-entrants (NERE) (Pilot 9 and 13) which were implemented between December 11, 2005 and December 4, NERE pilots tested the labour market impacts of decreasing the number of hours of insurable employment required for new entrants and re-entrants to the labour force to qualify for benefits. The NERE pilot reduced the EI entrance requirements for NEREs from 910 hours to 840 hours and encouraged the use of EI training benefits by marginal NEREs. Four different working while on claim (WWC) pilot projects (Pilot Projects Nos. 8, 12, 17 and 18) were implemented between July 5, 2005 and March 9, Pilot 8, 12 and 17 increased the maximum allowable earnings while on claim without a reduction to benefits from the greatest of $50 or 25% of the weekly benefit amount to the larger of $75 or 40% of the weekly benefit. Pilot 8 was implemented in 23 economic regions from December 11, 2005 to December 6, 2008, where Pilot 12 and 17 were implemented nationwide between December 7, 2008 and August 4,

14 Under Pilot 18, claimants can keep 50 cents of their EI benefits for every dollar earned, up to 90% of the weekly insurable earnings. Pilot 18 was introduced on August 5, 2012 and concluded on August 1,

15 3 Findings This section discusses the impacts and costs of EDB and Pilot 15 separately. The evaluation s findings are focused on the direct impacts and costs of these initiatives. It does pursue additional outcome analysis of claimants following their claim nor does it look at the macro-economic impact of the initiatives. 3.1 Extended Duration of Employment Insurance Regular Benefits Findings Estimated EDB Benefits Paid Evaluation analysis found that claimants, on average, responded to the additional entitlement by increasing the number of weeks of regular EI benefits that they used. The total benefits paid associated to the EDB includes just the direct spending of the additional entitlement weeks that were used, also the benefits of increased use of regular benefit weeks by claimants. Consequently, the total benefits paid are accounted for by two separate estimates, as presented in Table 1. Table 1 : Extended Duration of EI Regular Benefits Analysis Estimated Estimated Benefits Benefits due to due to Increased Additional Use of Regular Entitlement Descriptive Entitlement ($) ($) Total Estimated Additional Benefits ($) A B C = A + B Per Beneficiary 1, Per Claim Annual 568 Million 432 Million 1.00 Billion Total 1.41 Billion 1.09 Billion 2.50 Billion Percentage of Total Additional Benefits 57% 43% 100% Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims filed during EDB period with non-zero benefit, excluding LTW claims beyond 50 weeks of entitlement. The first estimate, presented in the column A of Table 1, is the amount due to additional entitlement obtained by only counting the additional weeks received by the claimants. This estimate accurately reflects the additional weeks of benefits paid to claimants; however, it does reflect the full benefits paid associated with the measure. Notably, it 5

16 assumes that the additional entitlement did impact regular entitlement use among claimants who did use any of the additional entitlement. Column B of Table 1 presents the second type of amount paid, which is related to the estimated increased use of the regular entitlement. Finally, Column C of Table 1 presents the total estimated benefits paid by this initiative, which is the summation of the aforementioned two different use of entitlement. The amount spent in providing additional EDB weeks was found to be $1.4 billion with $1,517 per beneficiary. 3 The estimated total additional amount associated with EDB is found to be $2.5 billion and 43% of which ($1 billion) is due to the estimated increased use of regular entitlement Additional Entitlement Impact on Claimants Behaviour Benefit Usage Table 2 presents EBD results on the use of additional benefit weeks. During the EDB period, 34% of pure regular benefit claims used some of the additional weeks, and 76% of these used the entire five weeks. Table 2: Extended Duration of EI Regular Benefits Additional Week Take-up Rate Number of Claims Mean Weeks Used Number of Claims Using 1 to 5 Extra Weeks Claims Using Any Extra Weeks Total % week 180, ,396 3,435 3,659 4,689 46,823 62, Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims filed during EDB period with non-zero benefit, excluding LTW claims. Further analysis has shown that: Claimants who are 55 years and older remained on claim longer. Gender differences in EDB take-up rates were minimal. EDB take-up was greatest in British Columbia, Ontario and the Atlantic provinces. 3 According to EI Monitoring and Assessment Report 2012, a total of 1,299,460 claimants had received $1.92 billion in additional benefits as a result of EDB. The difference between accounting cost and the estimated cost is because of the sample restrictions. The current analysis is based on a sample of pure regular claims i.e. completed EI claims to which only regular benefits were paid. Claimants deemed to be LTW are also excluded from the cost estimation. 6

17 The impact of a policy change on an individual s action is referred to as a behavioural response. A behavioural response due to a benefit extension can be captured by estimating the change in the usage of regular entitlement while controlling for other factors, just by the usage of the additional 5 week entitlement. Benefit usage can be influenced by the entitlement length as well as the economic conditions. Since the EDB initiative was implemented during the recession, the evaluation can measure the change in benefit usage during the EDB period can isolate the impact of the additional entitlement from the economic downturn. Econometric analysis (ESDC, 2015) shows an increase of 1.6 weeks on average in the length of claims filed during the EDB period. Further, increased use of regular entitlement was observed among all claimants during the EDB period, just among those who used additional weeks of benefits. Based on previous studies on EI, the EDB can be expected to have affected claimants job search behavior and labour market outcomes through its effect on benefit use. Krueger and Muller (2010) show that the generosity of EI benefits is inversely related to job search intensity. Benefit use may increase when entitlement periods are extended, as claimants feel less pressure to secure re-employment. At the same time, extensions to EI benefits may provide enhanced support for unemployed workers by allowing claimants to search carefully for better reemployment, as suggested in Browning & Crossley (2009) and Bloemen & Stancanelli (2005), and consequently bring about improved quality of job match. It was possible to assess in this evaluation whether or the additional benefit use helped employees realize a better job match resulting in greater productivity since no information (employment, income) was available on claimants post EDB experience. Benefit Exhaustion To determine whether the EBD initiative provided adequate temporary income support to those looking for suitable employment, an analysis of entitlement exhaustion was conducted. Econometric analysis (ESDC, 2015), controlling for several economic and demographic factors (see Table F.1 of Appendix F), found that the probability of entitlement exhaustion decreased during the EDB period. The study showed that claims during the EDB pilot encountered on average a 5.3 percentage point lower likelihood of entitlement exhaustion rate. These findings indicate that the 34.4% of claimants who used additional entitlement under EDB (Table 2) would have been likely to exhaust their entitlement in the absence of extended week initiatives. 7

18 3.2 Pilot Project Relating to Extended Benefits (Pilot Project No. 15) Findings Estimated Pilot 15 Benefits Paid One of the main conclusions of the evaluation of Pilot Projects Nos. 6 and 10 was that their cost was fairly high in relation to their policy objectives, primarily because the benefits provided reached a larger population the main population they were supposed to reach: seasonal workers. 4 Pilot 15 total benefits paid are presented in Table 3. Table 3: Pilot 15 Benefits Analysis Estimated Benefits Paid due to Additional Entitlement Descriptive ($) Estimated Benefits Paid due to Increased Use of Regular Entitlement ($) Total Estimated Additional Benefits Paid ($) B A C = A + B Per Beneficiary 1, Per Claim Within Pilot Regions Annual Million Million 279 Million Total 326 Million 233 Million 558 Million Percentage of Total Additional Benefits Paid 58% 42% 100% Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims filed during Pilot 15 period with non-zero benefit, excluding claims filed in the three regions impacted by the trigger provision. The estimated benefits paid due to additional entitlement for Pilot 15 was $326 million resulting in an average benefit of $1,432 per beneficiary. 5 The benefits paid due to estimated increased use of entitlement during Pilot 15 was 42% ($233 million) of the total $558 million benefits of Pilot 15. Therefore, for every dollar spent on providing 4 HRSDC. (2010). Evaluation of the Pilot Projects to Extend Employment Insurance Benefits by Five Weeks: MAR 2012/13 reported a total of $371.8 million in additional benefits were paid as a result of Pilot 15. 8

19 additional benefits during Pilot 15, there was on average an additional 42 cents spent on providing benefits for regular entitlement. The analysis on seasonal claims suggests that $17.8 million additional benefit was paid to the seasonal income gappers during Pilot 15, which is 3.2% of Pilot 15 total benefits paid Impact of Additional Entitlement on Claimants Behaviour, in Particular on Seasonal Claimants Similarly to the analysis presented for EDB, the impact of Pilot 15 on the benefit usage is discussed. The descriptive analysis is presented for all claims in Pilot 15 regions and for claims for seasonal income gappers. Results from econometric analysis after controlling for economic and demographic factors are provided as well. Benefit Usage All Claims in Pilot 15 Regions Table 4 presents Pilot 15 results on the use of additional weeks. During the Pilot period, 22,627 claims representing 29.6% of pure regular benefit claims from the pilot regions used some of the additional weeks, and 66% of these used the entire five weeks. Table 4: Pilot 15 Additional Week Take-up Rate Number of Claims Mean Weeks Used Number of Claims Using 1 to 5 Extra Weeks Claims Using Any Extra Weeks 1 week Total % 76, ,872 1,720 1,920 2,129 14,986 22, Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims filed during Pilot 15 period with non-zero benefit, excluding claims filed in the three regions impacted by the trigger provision. Further analysis has shown that: Claimants who are 55 years and older remained on claim longer. Pilot 15 take-up rates were higher among female claimants. Econometric analysis (ESDC, 2015) shows that claimants residing in the pilot regions during Pilot 15 period remained on claim 1 week longer on average. Pilot 15 decreased a claimant s likelihood of exhausting EI benefits by 6.4 percentage points on average. These findings indicate that the 29.6% of claimants who used additional entitlement under Pilot 15 (Table 4) would have been likely to exhaust their entitlement in the absence of extended week initiatives. 9

20 Benefit Usage Seasonal Income Gappers Since the objective of Pilot Project No. 15 was targeted to seasonal gappers, an analysis focussing on this subset of EI claims was conducted. Table 5 presents key characteristics of seasonal gappers, non-gappers and claimants in the pilot regions during the Pilot 15 period, the findings are summarized below. The proportion of female claimants was higher among the seasonal gappers the non-gappers. Seasonal gappers are found to be older non-gappers. Claimants who were 55 years and older represent 42.6% of the seasonal gappers compared to 30.5% of the seasonal non-gappers in pilot regions. It is observed that 51% of the seasonal gappers were from Quebec region while 42.5% of non-gappers were from this region. It is found that seasonal gappers had significantly a lesser amount of insured hours and earnings the non-gappers. As a result, seasonal gappers had a lower benefit rate and fewer weeks of entitlement the non-gappers. Notably, seasonal gappers remained on claim longer the non-gappers despite having fewer entitlement weeks since they all used their entire entitlements and are entitlement exhaustees. 10

21 Table 5: Profile of Seasonal Claimants and Gappers in the Pilot 15 Regions Seasonal Non- Seasonal Gappers Gappers All Seasonal Claims Total No. of Claims 28,919 1,043 29,962 Male Gender* Age* Rural /Urban (%) (%) (%) Female Year Old Rural Urban Atlantic Quebec Ontario Prairies British Colombia Primary Manufacturing Construction Services Government and Social Missing Average Insured Hours (Hours)* 1, ,161 Region* Industry Sector* (%) (%) Average Insured Earnings ($)* Average Benefit Rate ($)* Average Entitlement (Weeks)* Average Benefit Use (Weeks)* 13,286 9,289 13, * Significant difference between seasonal gappers and non-gappers. Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims filed during Pilot 15 period with non-zero benefit, excluding claims filed in the three regions impacted by the trigger provision; and those filed in Yukon, Nunavut, and the Northwest Territories. 11

22 Table 6 presents the proportion of seasonal claims and gappers, and average seasonal gap length (see the Definitions section in Appendix F) in pilot regions during the Pilot 15 period. During Pilot 15, 1.4% of the claims from the pilot regions were from seasonal gappers. They experienced an average seasonal gap length of 5.7 weeks. Table 6: Claim Profile Pilot 15 Seasonal Gappers Seasonal Gappers N % N % N % Seasonal Gappers /Seasona l (%) Average seasonal gap length (weeks) 29, , , Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims filed during Pilot 15 period with non-zero benefit, excluding claims filed in Yukon, Nunavut, and the Northwest Territories. Table 7 illustrates that 27.6% of the seasonal claims from the pilot regions during Pilot 15 used at least one additional week of benefit. This percentage is similar to what was observed among all claimants from the Pilot 15 regions (29.6%). In addition, Table 7 shows that 12.7% of seasonal claimants with additional weeks of benefits were gappers. In the absence of Pilot Projet No. 15, the proportion of gappers among seasonal claimants with additional weeks of benefits would have been 24.1%. Thus, Pilot Projet No. 15 has reduced the number of seasonal gappers by 11.4 percentage points. Table 7: Seasonal Beneficiaries and Gappers in Pilot Regions during Pilot 15 Seasonal (N) Seasonal Additional Entitlement Beneficiaries (%) Observed Gappers among Seasonal Beneficiaries (%) A Would have been Gappers among Seasonal Beneficiaries (%) B Not Gappers any among Seasonal Beneficiaries (%) C = B - A 29, Source: 10% sample of EI claims from the Status Vector file, restricted to completed pure regular claims with non-zero benefit filed during Pilot 15 period, excluding claims filed in the three regions impacted by the trigger provision; and those filed in Yukon, Nunavut, and the Northwest Territories. Controlling for Economic and Demographic Factors Econometric analysis (ESDC, 2015) suggests that on average, the probability of income gap among the seasonal claims in pilot regions decreased by 3.3 percentage points due to 12

23 Pilot 15 and that seasonal income gappers, who filed their claims from the pilot regions during the Pilot 15 period, had 2.2 weeks shorter income gap length on average. However, the claims associated with seasonal gappers during the Pilot 15 period represented only 4.6% of claimants that used extra weeks. Accordingly, despite being broadly targeted, evaluation findings suggest that Pilot 15 was successful in reducing the incidence of income gaps among the seasonal claimants as well as shortening their income gap periods Impact of Termination Trigger in Pilot 15 Aher feature that distinguishes Pilot 15 from EDB is the inclusion of an unemployment-based automatic termination trigger by which a region was to be excluded from the pilot when its unemployment rate was below 8% for 12 consecutive months. Associations between the timing of termination trigger and the claim outcome measures of interest were studied to explore the impact of termination trigger on claimants behaviour (ESDC, 2015). The outcomes of claims that began just few weeks before the trigger are compared to outcomes of claims that began just a few weeks after the trigger by looking at the trigger-affected regions only. A regression discontinuity analysis found that the termination trigger reduced the claim length by 5.3 weeks. On the contrary, the timing of termination trigger does have any significant effect on the entitlement exhaustion rate and regular entitlement usage rate. These findings suggest that the termination trigger was successful in terms of its timing and design. 13

24 4 Conclusions The first objective of EDB was to provide extended financial support to EI claimants as a spending stimulus during the uncertainty of the 2008/2009 economic downturn. Analysis of the benefits paid for EDB suggests that the initiative provided an estimated stimulus of 2.5 billion dollars between March 9, 2008 and September 11, During the initiative, increased use was observed among all claimants, just among those who used additional weeks of benefits. Further, the EDB initiative was successful in meeting its second objective of reducing the entitlement exhaustion rate by 5.3 percentage points. Pilot 15 was implemented to allow testing of the effects of providing five extra benefit weeks through a period of economic recovery and to help workers who regularly experience an income gap after exhausting their EI entitlement, before finding subsequent employment. Pilot 15 was successful in reducing the incidence of income gaps among the seasonal claimants; however, these claimants only represent a small proportion of all claimants who were impacted by the pilot. The termination trigger of Pilot 15 was successful in terms of its timing and design. In regions affected by the trigger, claimants exhaustion of benefits and number of weeks used were similar before and after the trigger. Therefore, the termination trigger is to be considered in the future if extending entitlement based on the unemployment rate. 14

25 Bibliography Angrist, J. D., & Pischke, J. S. (2008). Mostly Harmless Econometrics: An Eempiricist's Companion. Princeton University Press. Bloemen, H. G., & Stancanelli, E. G. (2005). Financial wealth, consumption smoothing and income shocks arising from job loss. Economica, 72(287), Browning, M., & Crossley, T. F. (2009). Shocks, Stocks, and Socks: Smoothing Consumption Over a Temporary Income Loss. Journal of the European Economic Association, 7(6), Canada Emploment Insurance Commission (CEIC). (2012) EI Monitoring and Assessment Report. Canada Emploment Insurance Commission (CEIC). (2013). 2012/13 EI Monitoring and Assessment Report. ESDC. (2014a). Evaluation of the Extension of Employment Insurance Regular Benefits for Long-Tenured Workers. ESDC. (2014b). Methodology Report on Termination Trigger for EI Pilot Project No. 15. (by Watcher, T. V.) (available upon request). ESDC. (2015). Extended Duration of EI Regular Benefits: Evaluation Technical Study. (available upon request). HRSDC. (2010). Evaluation of the Pilot Projects to Extend Employment Insurance Benefits by Five Weeks: (available upon request). HRSDC. (2011a). Literature Review for the Evaluation of Two Temporary Measures Extending the Duration of Employment Insurance Regular Benefits Extension of EI Regular Benefits for Long-Tenured Workers and the Extended Duration of Regular EI Benefits. (by Leonard, P.) (available upon request). HRSDC. (2011b). Methodology Report for the Intended Impacts of the Extended Duration of Employment Insurance Regular Benefits. (available upon request). HRSDC. (2012a). Interaction Between Employment Insurance (EI) Measures: Considerations for the Evaluation of the Economic Action Plan (EAP) Measures. (available upon request). HRSDC. (2012b). Methodology Report on the Behavioural Impacts of the Extended Duration of Employment Insurance Regular Benefits Initiative. (by Galdo, J.) (available upon request). Imbens, G. W., & Lemieux, T. (2008). Regression Discontinuity Designs: A Guide to Practice. Journal of Econometrics, 142(2),

26 Jacob, R. T., Zhu, P., Somers, M. A., & Bloom, H. (2012). A Practical Guide to Regression Discontinuity. MDRC. Krueger, A. B. & Mueller, A. (2010). Job search and unemployment insurance: New evidence from time use data. Journal of Public Economics, 94 (3), Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel data. MIT press. 16

27 Appendix A Pilot Regions Table A. 1: EI Economic Regions Included in Extended Benefits Pilots Province Pilot #6 Pilot #10 Pilot#15 NL St. John's St. John's St. John's* NL Newfoundland/Labrador Newfoundland/Labrador Newfoundland/Labrador PE Prince Edward Island Prince Edward Island Prince Edward Island NS Eastern Nova Scotia Eastern Nova Scotia Eastern Nova Scotia NS Western Nova Scotia Western Nova Scotia Western Nova Scotia NB Madawaska-Charlotte Madawaska-Charlotte Madawaska-Charlotte NB Restigouche-Albert Restigouche-Albert Restigouche-Albert QC Gaspésie-Îles-de-la- Gaspésie-Îles-de-la- Gaspésie-Îles-de-la- Madeleine Madeleine Madeleine QC Trois-Rivières Trois-Rivières Trois-Rivières QC Central Quebec Central Quebec Central Quebec QC North Western Quebec North Western Quebec North Western Quebec QC Lower Saint Lawrence and Lower Saint Lawrence and Lower Saint Lawrence and North Shore North Shore North Shore QC Chicoutimi-Jonquière Chicoutimi-Jonquière Chicoutimi-Jonquière* ON Sudbury Sudbury Sudbury* ON Northern Ontario Northern Ontario Northern Ontario MB Northern Manitoba Northern Manitoba Northern Manitoba SK Northern Saskatchewan Northern Saskatchewan Northern Saskatchewan BC Northern British Columbia Northern British Columbia Northern British Columbia YT Yukon Yukon Yukon NT Northwest Territories Northwest Territories Northwest Territories NU Nunavut Nunavut Nunavut BC Southern Coastal British Columbia BC Southern Interior British Columbia AB Northern Alberta Claims Period June 6, 2004 to June 4, 2006 June 11, 2006 to February 28, 2009 September 12, 2010 to September 15, 2012 * Pilot Project No. 15 ceased to apply in: St. John s on September 24, 2011; Chicoutimi-Jonquière on March 24, 2012; and Sudbury on June 23, Claims filed in these regions after these dates have non-pilot entitlements. 6 6 Canada Gazette - Vol. 145, No. 41 Canada Gazette - Vol. 146, No. 12 Canada Gazette - Vol. 146, No

28 Appendix B - Weeks of Entitlement by Regional Rate of Unemployment for Non- Pilot Regions and No-extension Period Table B.1: Entitlement Weeks for Non-Pilot Regions and the No-Extension Period Number of hours of insurable employment in qualifying period 6% and under 6% 7% 7% 8% 8% 9% 9% 10% 10% 11% 11% 12% 12% 13% 13% 14% 14% 15% 15% 16% 16%

29 Number of hours of insurable employment in qualifying period 6% and under 6% 7% 7% 8% 8% 9% 9% 10% 10% 11% 11% 12% 12% 13% 13% 14% 14% 15% 15% 16% 16%

30 Appendix C - Weeks of Entitlement by Regional Rate of Unemployment for Pilot Regions Table C.1: Entitlement Weeks for Pilot Regions Number of hours of insurable employment in qualifying period % and under 6% 7% 7% 8% 8% 9% 9% 10% 10% 11% 11% 12% 12% 13% 13% 14% 15% 16% 14% 15% 16%

31 Number of hours of insurable employment in qualifying period % 7% 8% 9% 10% 11% 12% 13% 14% 15% 6% and under 16% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16%

32 Number of hours of insurable employment in qualifying period % 7% 8% 9% 10% 11% 12% 13% 14% 15% 6% and under 16% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16%

33 Appendix D - Weeks of Entitlement by Regional Rate of Unemployment for EDB Period Table D.1: Entitlement Weeks for the Extended Duration of EI Regular Benefit Period Number of hours of 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 6% insurable and employment under 16% in qualifying period 7% 8% 9% 10% 11% 12% 13% 14% 15% 16%

34 Number of hours of 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 6% insurable and employment under 16% in qualifying period 7% 8% 9% 10% 11% 12% 13% 14% 15% 16%

35 Number of hours of 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 6% insurable and employment under 16% in qualifying period 7% 8% 9% 10% 11% 12% 13% 14% 15% 16%

36 Appendix E Evaluation Matrix Table E. 1: Evaluation Matrix EDB Evaluation Questions Lines of Evidence Literature Review Descriptive Analysis Econometric Studies Cost Study Need for the Initiative 1. What are the factors underlying the introduction of additional weeks of EI benefits? X 2. Was there a need for the additional weeks of benefit entitlement? X X Achievement of Expected Outcomes 3. What was the usage of the 5 additional weeks of benefits? X X 4. What impact does this initiative have on the exhaustion of benefits? X X 5. Do any specific groups need help others? Do groups who require additional help receiving it? X 6. What are the economic costs of the measure? X X Pilot 15 Evaluation Questions Need for the Initiative 7. What is the proportion of EI claimants who are seasonal workers and within these how many experience income gaps? X 26

37 Lines of Evidence Literature Review Descriptive Analysis Econometric Studies Cost Study Achievement of Expected Outcomes 8. What is the take-up rate for the additional weeks of benefits received under the Pilot? X 9. What impact do the extended weeks have on the length of claims and the exhaustion of benefits? X 10. What impact does Pilot Project 15 have on the incidence and length of income gap periods? X X X 11. What is the impact of the regional unemployment rate-based, automatic termination trigger on claimant behaviour? X X Demonstration of Efficiency and Economy 12. What were the costs of the measure and were they in-line with initial expectations? X X 13. How much of the benefits paid were to seasonal income gappers? X 27

38 Appendix F Data, Definitions and Methodology F.1 Lines of Evidence A literature review was conducted to address questions related to the rationale of the EDB and Extension of EI Regular Benefits for Long-Tenured Workers (LTW) initiatives. The full list of questions regarding EDB and Pilot 15 evaluation can be found in Appendix E Evaluation Matrix. This evaluation report is primarily based on the technical study Extended Duration of EI Regular Benefits: Evaluation Study 2014, which is a descriptive and econometric study of a sample of completed EI claims to which only regular benefits were paid. Three previous technical updates to ESDC, 2015 were also submitted to support the annual EI Monitoring and Assessment Reports (MARs), which only examined the impact of EDB using EI administrative data. But due to reporting and initiative, timelines were limited to claims completed at the time. F.2 Data Source and Restrictions The administrative data used are from the Status Vector (SV) file, a derivative of the department s Benefits and Overpayments file which is used to administer EI claims, and the Record of Employment (ROE). The SV includes information on claim applications, bi-weekly claimant reports, and EI Commission claim and benefits decisions. The data used for this analysis is based on a 10 percent sample of completed EI claims starting from June 5, 2005 to March 9, Claims receiving regular benefits alone were retained in the sample. Claims deemed to be LTW are excluded from the data sample when they received a larger entitlement they would have under the EDB benefit schedule. In addition, due to the retroactive nature of the EDB initiative, claimants who initiated a claim between March 9, 2008 and November 16, 2008 and who could have experienced a gap in their benefit periods were excluded from the sample (30% of claims during EDB time period). The ROE is completed by an employer when an employee stops working for that employer and contains information on the employment history of an individual. Only ROEs that were completed within 52 weeks after the end of the current claim have been considered. 28

39 F.3 Definitions The study of extended week initiatives requires the use of terms and concepts that are immediately obvious. The following are some of the key terminologies that are used throughout the report. Profile Pure Regular Claims: A claim where only regular benefits were paid. Other special benefits available through EI at the time include maternity, parental, sickness, and compassionate care leave benefits. Any claims with special benefits received are excluded from the sample. First-Time Claims: No regular claims in the 5 year prior to the current claim. Occasional Claims: One or two regular claims in the 5 year prior to the current claim. Frequent Claims: Three or regular claims in the 5 year prior to the current claim. Seasonal Claims: A subset of frequent claims i.e. those with 3 or regular claims in the 5 years prior to current claim, all starting within the same eight week calendar period as the current claim. Entitlement Exhaustees: Claims for which all weeks of regular entitlements are paid. Benefit Period Exhaustees: Claims that reach the final week of the benefit period before all regular benefits are paid. Gappers: Entitlement exhaustees who experienced an income gap longer 1 week between the exhaustion of their regular claim and their first day of work following 52 weeks of the current claim. An individual exhausting his or her claim on a Friday and starting a new job on the following Monday is considered to have a one week gap; this is due to the calculation of the week code variable in the administrative database. In order to avoid erroneously assuming these individuals experienced an income gap, only those claimants with an income gap longer one week were considered to be gappers. Note that this study considers only seasonal gappers for impact analysis; accordingly gappers were extracted only to identify seasonal gappers. 29

40 Seasonal Gappers: Gappers who had 3 or regular claims in the 5 years prior to current claim, all starting at the same eight week calendar period as the current claim. The definitions of gapper and seasonal gapper are explained in Figure F2. Figure F2: Gappers' Definition EI Claims Pure Regular EI Claims Other EI Claims Did Not Exhausted EI Benefits Exhausted EI Benefits Income gap of 1 week Income gap longer 1 week within 52 weeks following the current claim. Income gap surpasses 52 weeks following the current claim. GAPPERS Non-seasonal Gappers SEASONAL GAPPERS 3 or regular claims in the 5 years prior to current claim, all starting at the same eight week calendar period as the current claim. Outcome Additional Weeks Take-up Rate: Percentage of pure regular benefit claimants who had used some of the extra weeks. Benefit Use: Number of weeks of non-zero regular EI benefits paid to a claimant. Entitlement Exhaustion Rate: Percentage of pure regular benefit claims for which all weeks of regular entitlements are paid. Benefit Period Exhaustion Rate: Percentage of pure regular benefit claims for which the benefit period ends before the regular weeks of entitlement are paid. 30