IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

Sectoral shifts, stock market dispersion and unemployment in Canada

Listed author(s):
  • Mario Fortin
  • Abdelkrim Araar

Considerable attention has been given in the last ten years to estimation of the importance of sectoral shifts in explaining short-term fluctuations in unemployment. Recent studies have used US stock prices data to develop indexes of sectoral shocks less affected by cyclical influence than Lilien's employment dispersion index. Two indexes of sectoral shifts for Canada based on the sectoral dispersion of stock prices growth rates are calculated. These indexes are then used in unemployment equations incorporating variables measuring aggregate demand shocks and structural changes in order to assess the importance of sectoral and cyclical shocks in the determination of the Canadian unemployment rate. The estimation leads to the conclusion that the major recessions of 1981-82 and 1990-91 have been caused by aggregate demand shocks. However, both types of shocks contributed to the 1974-75 recession while the mild recession of 1980 was accompanied by an important sectoral shock. Estimations also show that the most important sectoral shock was in 1986, following the drop in energy prices, but a strong aggregate demand prevented any change in the unemployment rate at this time. The model also detects an important structural rise in the unemployment rate during the seventies. On the whole, the results show that, although sectoral shifts have the potential to induce short-term unemployment fluctuations, actual changes in the Canadian unemployment rate were mainly the consequences of monetary conditions and foreign demand for Canadian goods and services.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 29 (1997)
Issue (Month): 6 ()
Pages: 829-839

in new window

Handle: RePEc:taf:applec:v:29:y:1997:i:6:p:829-839
DOI: 10.1080/000368497326750
Contact details of provider: Web page:

Order Information: Web:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:29:y:1997:i:6:p:829-839. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.