Public policy in a time of crisis: A framework for evaluating canada's COVID-19 income support programs

Abstract

Income support programs introduced for workers during the first wave of COVID-19 lockdowns faced criticism for their theoretically negative labour supply effects. We propose that these concerns about work disincentives are embedded in restrictive assumptions about work, and led to suboptimal design of crisis support policies. We describe a framework for analyzing alternative crisis income support programs predicated on more realistic assumptions of labour markets and human motivation. Our framework proposes that balancing efficiency, equity, and voice objectives should be the goal of crisis labour market policies. We argue that adoption of a basic income targeted toward low-income workers, in combination with Canada's pre-existing EI program, would have balanced efficiency, equity and voice better than the combination of the CERB/CEWS. A targeted basic income would have also been more effective at achieving stated public health objectives.