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Employment Insurance (EI)

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PPGPortal > Home > Concept Dictionary > D, E > Employment Insurance (EI)

Employment Insurance (EI)

A government program that partially protects workers' incomes when they become unemployed.

(Mankiw, N. Gregory, Ronald Kneebone, Kenneth J. McKenzie and Nicholas Rowe. 2008. Principles of Macroeconomics, 4th Canadian ed. Toronto: Thomson Nelson, 200.)


Canada's EI program is expensive and controversial. Many economists believe that although the program may ease the burden of being unemployed, it may also cause the rate of unemployment to be higher than it would otherwise. This is because people with EI usually devote less time to find a job, become pickier in choosing a job, and even quit when they do have a job because they have the security of EI. Thus, the program may increase the amount of frictional unemployment without intending to do so.


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