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Lost in transition: the costs and consequences of sectoral labour adjustment

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  • Stephen Tapp

Abstract

This paper uses an equilibrium search and matching model to study Canada's sectoral labour adjustment in 2002-2006 during an increase in global commodity prices and exchange rate appreciation. I estimate economically significant adjustment costs for the aggregate economy in this episode and demonstrate that difficulty in transferring skills between jobs for individual workers can be an important contributor to these aggregate costs. The analysis also demonstrates that the level of unemployment benefits impacts the economy's sectoral composition, its aggregate productivity, and the speed of its adjustment to shocks.

Suggested Citation

  • Stephen Tapp, 2011. "Lost in transition: the costs and consequences of sectoral labour adjustment," Canadian Journal of Economics, Canadian Economics Association, vol. 44(4), pages 1264-1296, November.
  • Handle: RePEc:cje:issued:v:44:y:2011:i:4:p:1264-1296
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    Cited by:

    1. Yahong Zhang, 2013. "Unemployment Fluctuations in a Small Open-Economy Model with Segmented Labour Markets: The Case of Canada," Staff Working Papers 13-40, Bank of Canada.
    2. Dorothee Flaig & Harald Grethe & Scott McDonald & Khalid Siddig, 2012. "Intersectoral factor movements: do adjustment costs matter for welfare?," EcoMod2012 4418, EcoMod.

    More about this item

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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