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.” [Read more…]