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Persistent Unemployment and Sectoral Shocks in the Wake of the 1982 Recession

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Abstract

Following the 1982 recession, the unemployment rate fell much more rapidly in the U.S. than in Canada. This paper examines unemployment dynamics using provincial data for Alberta and Ontario, and finds that they differs significantly for the two provinces. A broad model which allows for unemployment insurance and recruitment intensity effects on unemployment is examined and applied to labour force gross flows data. An explanation for regional unemployment rate persistence is developed in which regional shocks account for observed patterns in gross flow and unemployment data. The weight of the Canadian resource sector explains the greater degree of unemployment rate persistence in Canada relative to the United States. A la suite de la récession de 1981-82, le taux de chômage est demeuré élevé plus longtemps au Canada qu'aux Etats-Unis. Ce texte examine la dynamique du chômage au moyen de données provinciales pour l'Alberta et l'Ontario. Des différences importantes dans les processus sont identifiées. Un modèle où l'assurance-chômage et l'intensité de recrutement inluencent le taux de chômage est appliqué aux données de flux brut du marché du travail. Le modèle explique les tendances régionales de persistance dans les flux bruts en fonction de chocs sectoriels qui ont favorisé le secteur manufacturier et défavorisé le secteur pétrolier. L'importance du secteur pétrolier dans l'économie canadienne permet d'expliquer le degré plus élevé de persistance dans le taux de chômage au Canada par rapport aux Etats-Unis.

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Bibliographic Info

Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 1.

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Length: 22 pages
Date of creation: May 1992
Date of revision:
Handle: RePEc:cre:crefwp:1

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Keywords: Persistent unemployment; sectoral shocks;

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