Sunday, May 27, 2012

Recent research at Harvard makes it clear the Harper EI changes make no sense

Employment insurance is there to provide income support to workers who have lost their jobs. Ideally, if the labour market is to work efficiently and well, then workers generally should be able to find comparable employment to what they had before.

The Harper government's changes are headed in the completely wrong direction.  I think Tom Walkom has it right in the Star in his column headlined "EI changes driven by contempt and ideology".

Moreover. there is recent research that contradicts the Harper approach to unemployment insurance.

As a kind of add-on at the end of a fascinating column in the Financial Times called "Lunch with the FT" (featuring a lunch discussion between FT columnist Martin Wolf and Paul Krugman) there is the following:
Young economists: The empiricists strike back
The empirical work of young economists, as championed by Paul Krugman, is influencing policy debates. Here are some names to watch, say FT leader writers Martin Sandbu and Ferdinando Giugliano:....

Raj Chetty, 32, is one of the youngest-ever tenured professors at Harvard’s economics department. He is best-known for going against the conventional theory that unemployment benefits reduce the incentive to look for work. Chetty’s research shows benefits can be helpful as they prevent people from rushing to take an unsuitable job.
The full Chetty study alluded to in the column can be found here:

I think someone should tell the Harper government that perhaps that practical, empirical research says they are headed in the wrong direction in this area as in so many others.