What Do We Know About the Relationship Between Regionalized Aspects of the Unemployment Insurance System and Internal Migration in Canada?

Abstract

The purpose of this paper is to critically review the past four decades of empirical research on the relationship between internal migration and regional variation in the generosity of Canada’s unemployment insurance system. It has long been argued that because the Canadian insurance system is more generous towards people who live in relatively disadvantaged regions, it retards the out-migration that is part of the market process, thereby slowing economic development and contributing to the persistence of regional inequality in earned incomes. The survey shows, however, that there is no evidence in the empirical literature that regional variation in the generosity of the insurance system has altered internal migration patterns in Canada in a substantial manner.

Keywords: regional variation in unemployment insurance generosity, internal migration, interprovincial migration, earned income, comprehensive income differentials, index of insurance generosity, labour market attachment, conditional logit model

JEL Classification: R230, J610, J680, H770