A literature review of experience-rating employment insurance in Canada

The US experience is the basis for most of the empirical evidence of the impact of experience rating on labour market behaviour. [...] Within each of these types of programs, the method for determining premiums also varies: rates can be based on the monetary costs of workplace accidents, the frequency or number of claims, or both.6 Of interest to researchers is that the number of workers’ compensation claims has steadily decreased in many WC programs on both sides of the Canada–United States border over the past two decades, whic [...] The literature examining experience rating in the context of WC programs is relevant for any discussion on the relative merits of introducing a similar rate-setting regime within the EI program, particularly since the WC experience is often held up as evidence for the success of experience rating at altering employer behaviour. [...] While it would appear that experience rating does have an impact on the behaviour of firms, namely on the extent to which they implement safety measures and appeal claims, the literature is not conclusive on the role of experience rating in the observed reduction of WC claims in recent years. [...] The paper argues that the successful implementation of experience rating in the United States was justification for introducing a similar system in Canada, and the relative merits and disadvantages are discussed as well as the opposition to such a scheme from employee- and employer-representative groups.