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Labor Market Adjustment in Canada and the United States

Author

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  • Mr. Alun H. Thomas
  • Mr. Eswar S Prasad

Abstract

This paper provides a quantitative assessment of the relative importance of different labor market adjustment mechanisms in Canada and the United States and also examines the effects of the unemployment insurance (UI) system on labor market adjustment. At the aggregate level, employment growth shocks result in similar unemployment rate responses but smaller wage responses in Canada relative to the United States. Although overall UI generosity has increased aggregate unemployment persistence in Canada, the endogenous component of UI has affected unemployment persistence only marginally. The lower degree of aggregate real wage flexibility in Canada has not been an important determinant of unemployment persistence.

Suggested Citation

  • Mr. Alun H. Thomas & Mr. Eswar S Prasad, 1997. "Labor Market Adjustment in Canada and the United States," IMF Working Papers 1997/002, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1997/002
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    Cited by:

    1. Eswar Prasad & Alun Thomas, 1998. "A disaggregated analysis of employment growth fluctuations in Canada," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 26(3), pages 274-287, September.
    2. Mario Lefebvre, 1997. "Les marchés du travail régionaux : une comparaison entre le Canada et les États-Unis," Staff Working Papers 97-17, Bank of Canada.

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