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Enrollment Responses to Labour Market Conditions: A Study of the Canadian Market for Scientists and Engineers

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  • Majumdar, Sumon
  • Shimmotsu, Katsumi

Abstract

As Canada increasingly structures itself towards a “knowledge based economy”, the supply of high-skilled professionals such as engineers and other science graduates acquires more importance. Following the theoretical framework developed by Ryoo and Rosen (2004), we develop and estimate a dynamic supply and demand model for engineers and scientists in Canada. We find that the estimated stock-flow dynamics are supportive of the theoretical model. The relative employment of engineers is quite sensitive to research and development (R&D) expenditures as a fraction of GDP, particularly after 1997. We then use the estimates to develop a dynamic impulse response function. Looking at the impact of a permanent increase in allocation towards R&D, we find that the adjustment process is relatively smooth and the market adjusts in about 2 to 8 years (plus the four years of natural lag in production) to within 80% of the final steady state. For a one-time improvement in R&D allocation, we find that under rational expectations, there is an initial increase in the number of science graduates, but then it falls to below the steady state value and remains there for a long period as the initial increase works its way through the market.

Suggested Citation

  • Majumdar, Sumon & Shimmotsu, Katsumi, 2006. "Enrollment Responses to Labour Market Conditions: A Study of the Canadian Market for Scientists and Engineers," Queen's Economics Department Working Papers 273581, Queen's University - Department of Economics.
    • Handle: RePEc:ags:quedwp:273581
    DOI: 10.22004/ag.econ.273581
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    References listed on IDEAS

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    1. Jaewoo Ryoo & Sherwin Rosen, 2004. "The Engineering Labor Market," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 110-140, February.
    2. Pashigian, B Peter, 1977. "The Market for Lawyers: The Determinants of the Demand for and Supply of Lawyers," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 53-85, April.
    3. Siow, Aloysius, 1984. "Occupational Choice under Uncertainty," Econometrica, Econometric Society, vol. 52(3), pages 631-645, May.
    4. Richard B. Freeman, 1976. "A Cobweb Model of the Supply and Starting Salary of New Engineers," ILR Review, Cornell University, ILR School, vol. 29(2), pages 236-248, January.
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