IDEAS home Printed from https://ideas.repec.org/h/sls/lfpcbe/06.html
   My bibliography  Save this book chapter

Decline in Youth Participation in Canada in the 1990s: Structural or Cyclical?

In: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)

Author

Listed:
  • Richard Archambault
  • Louis Grignon

Abstract

Of the three major age groups, youth (aged 15-24), experienced the largest fall in labour force participation and accounted for the lion’s share of the aggregate decline. Consequently, an understanding of the factors behind this development is essential to an overall understanding of the fall in labour force participation in the 1990s in Canada. In the fifth and final article in the symposium, Richard Archambault and Louis Grignon examine the causes of this large fall in youth labour force participation in Canada in the 1990s. They disaggregate the youth participation rate into three components: the student participation rate, the non-student participation rate, and the school enrolment rate. The aggregate youth rate is the sum of the student and non-student rates weighted by their respective shares of the population (the enrolment rate for students). Such an approach makes it possible to take account of behavioural differences between students and non-students and to treat the enrolment rate as a phenomenon to be explained rather than a determinant of the participation rate. All three variables are modelled as a function of a cyclical variable and a number of structural variables - the real wage, the relative minimum wage, employment insurance, social assistance, and a time trend. The results show the importance of economic conditions and the modest effect of public policy programs on the decision to participate in the labour market and go to school. Based on the equations estimated for the 1976-96 period, a dynamic simulation was conducted over the 1990-96 period to account for the impact of the variables on the student and non-student participation rates and enrolment rate. According to the equations estimated for the 15-24 age group, the cyclical variable accounts for about one half of the decline in the youth participation rate between 1990 and 1996, two thirds of the decline in the student participation rate, and about one third of the fall in both the non-student participation rate and rise in the enrolment rate. The remaining decline in the two participation rates and rise in the enrolment rate are not to any significant degree explained by the four structural variables, but rather are either captured by the time trend or not explained at all. Given these results, the authors conclude that we have a poor understanding of the non-cyclical forces that account for up to one half of the decline in youth labour force participation in the 1990s.

Suggested Citation

  • Richard Archambault & Louis Grignon, 1999. "Decline in Youth Participation in Canada in the 1990s: Structural or Cyclical?," A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), in: Andrew Sharpe & Louis Grignon (ed.),A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), pages 71-87, Centre for the Study of Living Standards.
    • Handle: RePEc:sls:lfpcbe:06
    as

    Download full text from publisher

    File URL: http://www.csls.ca/journals/simp/simp06.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mario Fortin & Pierre Fortin, 1999. "The Changing Labour Force Participation of Canadians, 1969-96: Evidence from a Panel of Six Demographic Groups," A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), in: Andrew Sharpe & Louis Grignon (ed.),A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), pages 12-24, Centre for the Study of Living Standards.
    2. David Card & Craig Riddell, 1996. "Unemployment in Canada and the United States: A Further Analysis," Working Papers 731, Princeton University, Department of Economics, Industrial Relations Section..
    3. 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.
    4. David Card & W. Craig Riddell, 1996. "Unemployment in Canada and the United States: A Further Analysis," Working Papers 731, Princeton University, Department of Economics, Industrial Relations Section..
    5. repec:qed:wpaper:904 is not listed on IDEAS
    6. repec:fth:prinin:297 is not listed on IDEAS
    7. David Card & W. Craig Riddell, 1992. "A Comparative Analysis of Unemployment in Canada and the United States," Working Papers 677, Princeton University, Department of Economics, Industrial Relations Section..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pierre St-Amant & David Tessier, 1998. "Tendance des dépenses publiques et de l'inflation et évolution comparative du taux de chômage au Canada et aux États-Unis," Staff Working Papers 98-3, Bank of Canada.
    2. Irene Ip & Sheryl King & Geneviève Verdier, 1999. "Structural Influences on Participation Rates: A Canada-U.S. Comparison," A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), in: Andrew Sharpe & Louis Grignon (ed.),A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), pages 25-41, Centre for the Study of Living Standards.
    3. Peter Kuhn & A. Leslie Robb, 1998. "Shifting Skill Demand and the Canada-US Unemployment Gap: Evidence from Prime-Age Men," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 170-191, February.
    4. Michael Baker & Samuel A. Rea, 1998. "Employment Spells And Unemployment Insurance Eligibility Requirements," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 80-94, February.
    5. Krueger, Alan B. & Meyer, Bruce D., 2002. "Labor supply effects of social insurance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 33, pages 2327-2392, Elsevier.
    6. Mario Fortin & Abdelkrim Araar, 1997. "Sectoral shifts, stock market dispersion and unemployment in Canada," Applied Economics, Taylor & Francis Journals, vol. 29(6), pages 829-839.
    7. Miquel Faig & Min Zhang, 2012. "Labor Market Cycles, Unemployment Insurance Eligibility, and Moral Hazard," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 41-56, January.
    8. Miquel Faig, 2008. "Labor Market Cycles and Unemployment Insurance Eligibility," 2008 Meeting Papers 183, Society for Economic Dynamics.
    9. Min Zhang, 2010. "Unemployment Insurance Eligibility, Moral Hazard and Equilibrium Unemployment," Working Papers tecipa-405, University of Toronto, Department of Economics.
    10. Arnold de Silva, 1997. "Immigrant Participation in the Unemployment Insurance System," Canadian Public Policy, University of Toronto Press, vol. 23(4), pages 375-397, December.
    11. Mario Fortin & Pierre Fortin, 1999. "The Changing Labour Force Participation of Canadians, 1969-96: Evidence from a Panel of Six Demographic Groups," A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), in: Andrew Sharpe & Louis Grignon (ed.),A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999), pages 12-24, Centre for the Study of Living Standards.
    12. Jochen Mankart & Rigas Oikonomou, 2017. "Household Search and the Aggregate Labour Market," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 84(4), pages 1735-1788.
    13. 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.
    14. James Ted McDonald & Christopher Worswick, 1999. "Wages, Implicit Contracts, and the Business Cycle: Evidence from Canadian Micro Data," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 884-913, August.
    15. Florian Hoffmann & Thomas Lemieux, 2016. "Unemployment in the Great Recession: A Comparison of Germany, Canada, and the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 95-139.
    16. Pavel Gertler, 2010. "The wage curve: A panel data view of labour market segments," Working and Discussion Papers WP 3/2010, Research Department, National Bank of Slovakia.
    17. Olivier Blanchard & Lawrence F. Katz, 1997. "What We Know and Do Not Know about the Natural Rate of Unemployment," Journal of Economic Perspectives, American Economic Association, vol. 11(1), pages 51-72, Winter.
    18. Cédric Tille, 1998. "Decomposition of the Unemployment Gap between Canada and the United States: Duration or Incidence?," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 90-102, February.
    19. David Card & Francis Kramarz & Thomas Lemieux, 1999. "Changes in the Relative Structure of Wages and Employment: A Comparison of the United States, Canada, and France," Canadian Journal of Economics, Canadian Economics Association, vol. 32(4), pages 843-877, August.
    20. MacLeod, W Bentley, 2016. "Human capital: Linking behavior to rational choice via dual process theory," Labour Economics, Elsevier, vol. 41(C), pages 20-31.

    More about this item

    Keywords

    Canada; Labour Force Participation; Labor Force Participation; Participation Rate; Labour Force Participation Rate; Labor Force Participation Rate; Age Structure; Age; Youth; Teenage; Young Adult; Student; Enrolment Rate; Enrolment; Enrollment Rate; Enrollment;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sls:lfpcbe:06. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CSLS (email available below). General contact details of provider: https://edirc.repec.org/data/cslssca.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.