Research summary: Factors that influence wage expectations

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Why this study

The study looks at unemployed people in Canada who receive Employment Insurance (EI) benefits and what they expect to earn when they find another job. It explores how they think about their pay and how these thoughts change with their:

• personal situations
• local job markets, and
• use of the EI program

What we did

The study uses data from 2001 to 2019 from 3 sources:

• Employment Insurance Coverage Survey (EICS)
• Canadian Employer-Employee Dynamics Database (CEEDD), and
• Labour Force Survey

The EICS tells us who can get EI benefits and the lowest pay they would accept to go back to work. The CEEDD connects information about workers and employers, helping to compare what people expect to earn and whether they get EI benefits or not. The LFS provides unemployment rates and other information about the labour market.

What we found

Many people who are unemployed and receive EI were willing to accept lower pay than those who do not get EI. Over half of the people getting EI would consider jobs that paid 75% of what they used to earn. This suggests those receiving EI were more willing to accept lower wages.

The study also found that people's willingness to take a lower-paying job was influenced by factors such as:

• age
• marital status
• education, and
• previous job tenure

For example, older people with fewer children and those with more education were more willing to take jobs that paid less. When unemployment rates were high, EI recipients were also more likely to accept jobs that paid less than what they used to earn.

Even if they said they would accept lower pay, many still managed to earn similar amounts that they did before being unemployed. This was especially the case for those who did not receive EI. Both groups saw an increase in their household income after being unemployed. The increase was bigger for those who received EI.

What it means

Overall, the findings show that unemployment is complex. Many factors affect how much people expect to earn and whether they will take a job. Unemployed people getting EI often have more stable household incomes and are willing to accept lower pay. In contrast, those who do not receive EI look for better-paying jobs. This shows that each group experiences different pressures and levels of confidence when trying to find another job. Understanding these differences can help create better support systems for people looking for work.

Contact us

For access to the full report, please contact us using the email address below.

Skills and Employment Branch, Labour Market Information Directorate, Policy Research Analysis and Geomatics Division

Email: esdc.nc.sspb.research-recherche.dgpss.cn.edsc@esdc-edsc.gc.ca