The Sources of Unemployment in Canada, 1967-1991: Evidence from a Panel of Regions and Demographic Groups
We analyze the determinants of Canadian unemployment in a framework incorporating demand and supply-side variables: the interest rate, taxation, foreign activity, minimum wages, union density, demographic pressure, unemployment insurance, terms of trade. The model is estimated with 500 observations for 5 Canadian regions and 4 demographic groups, 1967-1991. We provide a comprehensive picture of the macroeconomic and structural causes of unemployment with data combining the advantages of macroeconomic time series and microeconomic cross sections. The long-term rise in Canadian unemployment since 1960 is attributed to higher real interest rates, the UI reform of 1972, and slightly adverse net demographic pressure.
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