In November 2014, the price of oil was already in decline. OPEC’s leadership decided not to cut production. As a result, throughout the beginning of 2015, oil prices continued to decline and tens of thousands of Canadian workers in the sector received lay off notices. The federal government responded in 2016 by retroactively extending employment insurance (EI) benefits for those affected. One group of workers received five weeks of additional benefits while others, who had worked in the industry longest, received up to 25 extra weeks. Steven Ryan, a recent graduate of the PhD program at the Department of Economics, examined this unprecedented program in his paper Riding Out the Downturn: The Re-Employment Effects of an Unemployment Insurance Extension to answer a simple question: Do more generous unemployment benefits help people find better jobs?
In short, yes.
“What I actually find is that the people who benefited from those additional weeks of unemployment insurance availability ultimately have higher earnings from employment,” Ryan explained. “Substantially higher! In fact, those higher earnings generate additional tax revenues that essentially offset the costs of the additional benefits.”
Ryan used a quasi-experimental method called fuzzy regression discontinuity design (FRDD). He could compare the group of people who received five extra weeks of benefits with those who received twenty-five and track their employment and income over the long-term using administrative data like tax returns.
“People who got the extension were much more likely to be back in the same industry they were laid off from,” Ryan said. “That speaks to the idea that, in a temporary downturn, staying unemployed longer lets people rematch with industries where they’ve already built-up sector-specific capital.”
Not only were people who received the extended benefits more likely to return to their previous industry, but they earned more money in their next jobs and generated higher tax revenues as a result.
Tracking the success of programs, or social interventions, like the one-time EI extension for oil sector workers, is especially important to Ryan. A mature student, he worked with the Government of Canada, the Government of Ontario, and the poverty alleviation lab J-PAL North America before starting his PhD. His previous studies focused on social policy, not economics.
“I’ve always been interested in social policy,” he said. “What changed was the toolkit. Instead of writing essays about what a just society looks like, I’m now analyzing data to answer specific questions. The scope might be narrower, but the impact can be real and meaningful.”
With his expertise in economics research methodologies, Ryan’s new focus is on applying causal inference and empirical analysis to evaluate social interventions and inform the design of more effective programs and policies.
“To his research agenda Steven brings a deep, practitioner’s understanding of Canadian social policy from his public sector experience, paired with a rigorous empirical toolkit,” said Professor Kory Kroft, Ryan’s supervisor. “These assets and his background in public policy will serve him well throughout his career as an economist.”
Entering an economics graduate program without an economics background was helped Ryan approach his role as a teaching assistant with enhanced empathy.
“I know what it’s like to encounter concepts for the first time without a strong technical foundation,” he said. “I always strive to make things intuitive. I want to connect the intuition behind an idea to the formal notation on the page, not just give a textbook explanation that doesn’t really tell you much.”
Discussions about social programs that have been subjected to rigorous evaluation are good examples to bring to students learning about evidence generation and research methods. They’re also a good example of how a policy specialist becomes an economist.
“I think there’s a better chance for good policy to emerge when we move discussions out of the polarized political sphere and into a more technocratic space,” Ryan said. “That might just be my postdoctoral, pointy-headed economist side talking, but I believe it.”
Return to the Department of Economics website.
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