Supply Side Hysterisis: The Case of the Canadian Unemployment InsuranceSystem

Thomas Lemieux () and W. Bentley Macleod

No 6732, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents results from a 1971 natural experiment carried out by the Canadian government on the unemployment insurance system. At that time, they dramatically increased the generosity of the system. We find that the propensity to collect UI increases with a first time exposure to the system. Hence as more individuals experience unemployment their lifetime use of the system increases. This supply side hysterisis effect may explain why unemployment has steadily increased over the 1972 - 1992 period, even though the generosity of unemployment insurance did not.

JEL-codes: I38 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ltv and nep-pub
Date: 1998-09
Note: PE LS
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Related works:
Working Paper: Supply Side Hysteresis: The Case of the Canadian Unemployment Insurance System (1997)
Journal Article: Supply side hysteresis: the case of the Canadian unemployment insurance system (2000)
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