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Unemployment invariance hypothesis, added and discouraged worker effects in Canada

Author

Listed:
  • Aysit Tansel
  • Zeynel Abidin Ozdemir

Abstract

Purpose - The purpose of this paper is to explore the long-run relationship between unemployment rate (UR) and labor force participation rate (LFPR) for men and women in Canada. Given that there are differences in the URs and participation rates of men and women, the authors perform separate analysis for them also. Design/methodology/approach - The authors use co-integration analysis to investigate the existence of a long-run relationship between UR and LFPR in Canada using time series monthly data for the past 40 years. Findings - The finding that there is long-run relationship between UR and LFPR leads the authors to doubt the pertinence of the unemployment invariance hypothesis for Canada. The authors further find evidence for added-worker effect for men and discouraged-worker effect for women in Canada and the authors elaborate on the possible explanations for this seemingly contradictory finding. Practical implications - The lack of support for the unemployment invariance hypotheses implies that changes in the participation rate which may be due to aging population, policies of early retirement or constraints on working time will affect the UR in the long run. Originality/value - This paper investigates the unemployment invariance hypothesis in Canada to come up with policy implications about long-run UR. The authors further elaborate on the possible explanations for the added-worker effect for men and the discouraged-worker effect for women that the authors find in this study.

Suggested Citation

  • Aysit Tansel & Zeynel Abidin Ozdemir, 2018. "Unemployment invariance hypothesis, added and discouraged worker effects in Canada," International Journal of Manpower, Emerald Group Publishing Limited, vol. 39(7), pages 929-936, October.
    • Handle: RePEc:eme:ijmpps:ijm-04-2017-0059
    DOI: 10.1108/IJM-04-2017-0059
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    Citations

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    Cited by:

    1. Moundir Lassassi & Aysit Tansel, 2022. "Female labor force participation in Egypt and Palestine: An age–period–cohort analysis," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 1997-2020, November.
    2. Lassassi, Moundir & Tansel, Aysit, 2020. "Female Labor Force Participation in Five Selected MENA Countries: An Age-Period-Cohort Analysis (Algeria, Egypt, Jordan, Palestine and Tunisia)," GLO Discussion Paper Series 693, Global Labor Organization (GLO).
    3. Liviu Toader & Dorel Paraschiv & Vasile Dinu & Daniela Manea & Mihaela Mihai, 2023. "The effects of private sector companies’ research and development investments on the adoption of cloud computing services in the European Union," E&M Economics and Management, Technical University of Liberec, Faculty of Economics, vol. 26(2), pages 189-202, June.
    4. Yue Yin & Ye Jiang, 2023. "Fertility Effects of Labor Market Conditions at Graduation," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 31(4), pages 120-152, July.
    5. Maridueña-Larrea, Ángel & Martín-Román, Ángel L., 2025. "Unemployment invariance hypothesis and labor supply: a test for 31 American countries," MPRA Paper 125831, University Library of Munich, Germany.
    6. Moundir Lassassi & Aysit Tansel, 2020. "Female labor force participation in five selected MENA countries: An age-period-cohort analysis," Koç University-TUSIAD Economic Research Forum Working Papers 2018, Koc University-TUSIAD Economic Research Forum.
    7. Martín-Román, Ángel L., 2022. "Beyond the added-worker and the discouraged-worker effects: the entitled-worker effect," Economic Modelling, Elsevier, vol. 110(C).
    8. Unknown, 2024. "Testing Gender and Race Non-linear Unemployment Invariance Hypothesis in South Africa: Evidence from Threshold Regression," African Journal of Economic Review, African Journal of Economic Review, vol. 13(1).
    9. Congregado, Emilio & Gałecka-Burdziak, Ewa & Golpe, Antonio A. & Pater, Robert, 2021. "Unemployment invariance hypothesis and structural breaks in Poland," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    10. Walter Paternesi Meloni & Antonella Stirati, 2023. "The decoupling between labour compensation and productivity in high‐income countries: Why is the nexus broken?," British Journal of Industrial Relations, London School of Economics, vol. 61(2), pages 425-463, June.

    More about this item

    Keywords

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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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