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Canadian regional labour market evolutions: a long-run restrictions SVAR analysis

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  • Mark Partridge
  • Dan Rickman

Abstract

Canada's high reliance on commodities can work against its constitutionally mandated goal of regional equity in economic development, while also inhibiting macroeconomic performance and limiting monetary policy effectiveness. Yet, flexible and integrated regional labour markets can help achieve both equity and macroeconomic goals. Therefore, this study examines the dynamics of Canadian provincial labour markets using a long-run restrictions structural vector autoregression (SVAR) model. Labour market fluctuations are decomposed into the parts arising from shocks to labour demand (new jobs), labour supply through migration (new people) and internal labour supply (original residents). The results suggest that demand innovations primarily underlie provincial labour market fluctuations. Despite significant geographic and language barriers that could impede their performance, there also is little overall evidence to suggest that provincial labour markets are more sluggish or less flexible than US state labour markets. Finally, original residents benefit slightly more from increased provincial labour demand compared to findings for US states.

Suggested Citation

  • Mark Partridge & Dan Rickman, 2009. "Canadian regional labour market evolutions: a long-run restrictions SVAR analysis," Applied Economics, Taylor & Francis Journals, vol. 41(15), pages 1855-1871.
    • Handle: RePEc:taf:applec:v:41:y:2009:i:15:p:1855-1871
    DOI: 10.1080/00036840601131789
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    2. Piras , Romano & Etzo, Ivan & Massidda, Carla & Mattana, Paolo, 2021. "A Panel SVAR Analysis of the Long-Run Economic Impacts of Migration," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 74(2), pages 197-224.
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    6. David Kim & Woo‐Yung Kim, 2020. "What drives the labor share of income in South Korea? A regional analysis," Growth and Change, Wiley Blackwell, vol. 51(3), pages 1304-1335, September.

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