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The Labour Market Dynamics of Unemployment Rates in Canada and the United States

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  • Michael Baker
  • Miles Corak
  • Andrew Heisz

Abstract

We develop a framework for the dynamic analysis of unemployment and use it to examine the difference in unemployment rates between Canada and the United States over the period 1980-1993. An examination of both the incidence and the duration of unemployment uncovers a series of stylized facts that explanations of persistently higher Canadian unemployment rates should recognize. Cyclical variations in the unemployment rate differential are due about equally to relative changes in spell duration and incidence. A decrease in the incidence of unemployment in the US relative to Canada is the major factor determining the trend in the unemployment rate gap. Finally, while the composition of unemployment is very different between the two countries - permanent job loss being more important in Canada and labour market entry and re-entry more important in the US - these differences are not the cause of longer spell lengths in Canada. Unemployment spells last longer in Canada for all groups of unemployed regardless of reason for unemployment.

Suggested Citation

  • Michael Baker & Miles Corak & Andrew Heisz, 1998. "The Labour Market Dynamics of Unemployment Rates in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 72-89, February.
  • Handle: RePEc:cpp:issued:v:24:y:1998:i:s1:p:72-89
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    References listed on IDEAS

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    1. David Card & W. Craig Riddell, 1993. "A Comparative Analysis of Unemployment in Canada and the United States," NBER Chapters,in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 149-190 National Bureau of Economic Research, Inc.
    2. Ross D. Milbourne & Douglas D. Purvis & W. David Scoones, 1991. "Unemployment Insurance and Unemployment Dynamics," Canadian Journal of Economics, Canadian Economics Association, vol. 24(4), pages 804-826, November.
    3. Miles Corak & Stephen R. G. Jones, 1995. "The Persistence of Unemployment: How Important Were Regional Extended Unemployment Insurance Benefits?," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 555-567, August.
    4. Baker, G M & Trivedi, P K, 1985. "Estimation of Unemployment Duration from Grouped Data: A Comparative Study," Journal of Labor Economics, University of Chicago Press, vol. 3(2), pages 153-174, April.
    5. Baker, Michael, 1992. "Unemployment Duration: Compositional Effects and Cyclical Variability," American Economic Review, American Economic Association, vol. 82(1), pages 313-321, March.
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    Cited by:

    1. Campolieti, Michele, 2009. "An Analysis of Unemployment Incidence and Duration: Some New Evidence from Canada," CLSSRN working papers clsrn_admin-2009-14, Vancouver School of Economics, revised 02 Feb 2009.
    2. Robert G. Valletta, 1998. "Changes in the structure and duration of U.S. unemployment, 1967-1998," Economic Review, Federal Reserve Bank of San Francisco, pages 29-40.
    3. Tiff Macklem & Francisco Barillas, 2005. "Recent Developments in the Canada-US Unemployment Rate Gap: Changing Patterns in Unemployment Incidence and Duration," Canadian Public Policy, University of Toronto Press, vol. 31(1), pages 101-108, March.
    4. David Gray & Gilles Grenier, 1998. "Jobless Durations of Displaced Workers: A Comparison of Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 152-169, February.

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