Unemployment insurance and the labor supply to the mining industry in Manitoba

Abstract

...At this time no analysis of the impacts of UI on regional individual labor supply of a specific sector has been published. There is a need to identify and, if present, quantify any disincentive to work implicit in the 1971 changes of the UI Act, as evidenced. by the behaviour of miners. It is expected that a regional sector analysis of individuals will circumvent the regional and sectoral aggregation problems characteristic of national analysis. The duration of unemployment reflects the individual's labor supply, i.e., willingness to accept employment, as well as the demand for labor. Given, for a cross-section analysis of individual data, that the demand conditions are constant, the duration of claim, subject to the constraints imposed by UI regulations, is a proxy for the individual's supply of labor. It is possible, given liberal interpretations of UIC requirements of 'suitable' employment, and the assumption that unemployment is leisure, for the worker to vary the duration of unemployment so that his utility from leisure and work activities is maximized...