THE PERSISTENCE OF UNEMPLOYMENT - HOW IMPORTANT WERE REGIONAL EXTENDED UNEMPLOYMENT-INSURANCE BENEFITS

This paper assesses the contribution of regionally extended unemployme nt insurance benefits to the persistence of the Canadian unemployment rate during the 1980s. We use administrative data associated with the operation of the UI program to produce counts of the number of UI clai mants by benefit phase. The data suggest that the change in the number of unemployed individuals above the level prevailing in 1981 is much larger than the change in the number of regionally extended benefit re cipients. We also examine the time-series properties of the number of UI claimants by benefit phase, and find that the number of regionally extended recipients is not unusually persistent. Indeed, this series d isplays less persistence than the number of claimants in other benefit phases. We recognize that the increase in potential benefit duration caused by regionally extended benefits may lengthen the time claimants spend in the initial and labour force extended benefit phases, but we conclude that this indirect channel would have to be particularly str ong to prevent one from concluding that the number of regionally exten ded benefit recipients was of relatively little importance in explaini ng the increased level and persistence of the Canadian unemployment ra te during the 1980s.