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Structural and Macro Policy and the Canada-US Unemployment Rate Gap


  • Munir A. Sheikh


Understanding the causes of the Canada-US unemployment rate gap necessitates examining both supply and demand factors. The paper argues that, despite recent tightening, unemployment insurance remains a major factor in explaining the higher Canadian unemployment rate. On the policy front, the paper argues the importance of state-dependence: the recent conduct of policies heavily depends upon what was done in the past. For example, fiscal tightening, which could have influenced unemployment, was unavoidable because of the build-up of debt over the past two decades, which is very costly to the economy. The paper concludes that there is still a lot on this subject that is not well understood and recommends continued research in this area.

Suggested Citation

  • Munir A. Sheikh, 1998. "Structural and Macro Policy and the Canada-US Unemployment Rate Gap," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 271-276, February.
  • Handle: RePEc:cpp:issued:v:24:y:1998:i:s1:p:271-276

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