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A Comparative Analysis of Unemployment in Canada and the United States

In: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States

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  • David Card
  • W. Craig Riddell

Abstract

Throughout the late 1980s unemployment rates remained 2-3 percentage points higher in Canada than the U.S. We use individual microdata from the U.S. Current Population Survey and the Canadian Survey of Consumer Finances to study the emerging unemployment gap between the two countries. For women, we find that the relative rise in Canadian unemployment occurred with relative increases in per capita weeks of work. The unemployment gap for Canadian women was driven by a rise in the probability that nonworkers are classified as "unemployed" as opposed to "out of the labor force". For men, the increase in unemployment was accompanied by a relative decrease in Canadian employment rates, and an increase in the probability that men with no weeks of work are classified as "in the labor force". A comparison of annual work patterns and income recipiency in the two countries suggests that Canadians of both sexes have increasingly adjusted their labor supply to the parameters of the Canadian Unemployment Insurance system.
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Suggested Citation

  • 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.
    • Handle: RePEc:nbr:nberch:11148
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    References listed on IDEAS

    as
    1. Orley Ashenfelter & David Card, 1986. "Why Have Unemployment Rates in Canada and the U.S. Diverged?," Working Papers 584, Princeton University, Department of Economics, Industrial Relations Section..
    2. M. W. Keil & J. S. V. Symons, 1990. "An Analysis of Canadian Unemployment," Canadian Public Policy, University of Toronto Press, vol. 16(1), pages 1-16, March.
    3. Rebecca M. Blank & David E. Card, 1991. "Recent Trends in Insured and Uninsured Unemployment: Is There an Explanation?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(4), pages 1157-1189.
    4. Phillip B. Levine, 1990. "Contemporaneous vs. Retrospective Unemployment: Through the Filter of Memory or the Muddle of the Current Population Survey?," Working Papers 656, Princeton University, Department of Economics, Industrial Relations Section..
    5. Anderson, Patricia M & Meyer, Bruce D, 1993. "Unemployment Insurance in the United States: Layoff Incentives and Cross Subsidies," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 70-95, January.
    6. Chinhui Juhn, 1992. "Decline of Male Labor Market Participation: The Role of Declining Market Opportunities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(1), pages 79-121.
    7. Ashenfelter, Orley & Card, David, 1986. "Why Have Unemployment Rates in Canada and the United States Diverged?," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages 171-195, Supplemen.
    8. 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.
    9. repec:fth:prinin:276 is not listed on IDEAS
    10. Orley Ashenfelter & David Card, 1986. "Why Have Unemployment Rates in Canada and the U.S. Diverged?," Working Papers 584, Princeton University, Department of Economics, Industrial Relations Section..
    11. George A. Akerlof & Janet L. Yellen, 1985. "Unemployment Through the Filter of Memory," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(3), pages 747-773.
    12. Green, David A & Riddell, W Craig, 1993. "The Economic Effects of Unemployment Insurance in Canada: An Empirical Analysis of UI Disentitlement," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 96-147, January.
    13. Phillip Levine, 1990. "Contemporaneous vs. Retrospective Unemployment: Through the Filter of Memory or the Muddle of the Current Population Survey?," Working Papers 656, Princeton University, Department of Economics, Industrial Relations Section..
    14. John McCallum, 1987. "Unemployment in Canada and the United States," Canadian Journal of Economics, Canadian Economics Association, vol. 20(4), pages 802-822, November.
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    More about this item

    JEL classification:

    • C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics

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