Benefits for employee initiated time away from work should be delivered through individual accounts, and a new program for maternity and parental benefits should be started outside of Employment Insurance.
More than one out of every three dollars distributed through the Employment Insurance program are for so-called Special Benefits, those parts of the program associated with maternity and parental leave, with caregiving, and with sickness.
The fact that the COVID19 pandemic is a health crisis with important job market consequences has sharply exposed and widened gaps not just in EI’s coverage and delivery of job loss benefits, but also with these Special Benefits.
Constructive reform will require rationalization of coverage for demographic and family risks and should proceed in a way that recognizes both their collective and individual nature, with a delivery design that gives citizens agency in an incentive compatible way.
This can be best accomplished by delivering Special Benefits through individual accounts, while at the same time devising a new program for maternity and parental benefits outside Employment Insurance.
Continue reading “Employment Insurance reform that promotes agency”