Shifting Skill Demand and the Canada-US Unemployment Gap: Evidence from Prime-Age Men
This paper considers the possible role of shifts in labour demand away from unskilled workers, combined with an institutionally- generated greater labour supply elasticity in Canada, in explaining the apparent secular increase in Canadian male unemployment, and in explaining the emergence of the Canada-U.S. unemployment rate gap in the 1980's. Using comparable data on annual weeks worked and unemployed in both countries, we identify four main facts which are consistent with such this explanation: Both Canada and the US experienced wage polarization over this period, with substantial real wage declines for unskilled men; annual weeks worked fell disproportionately among unskilled workers in both countries; responses of weeks worked to wage declines were more elastic in Canada; and aggregate movements out of employment over this period corresponded closely to movements into unemployment in Canada. Interestingly, however, unskilled U.S. men were more likely than Canadians to leave the labour force as their employment fell, adding further to the Canada-U.S. unemployment gap. As well, some fairly substantial decreases in weeks worked are observed quite high up in the Canadian wage distribution, where wages did not fall appreciably. The latter changes cannot easily be explained by a shifts in labour demand alone.
|Date of creation:|
|Contact details of provider:|| Postal: 1280 Main Street West, Hamilton, Ontario, L8S 4M4|
Phone: (905) 525-9140 ext. 22765
Fax: (905) 521-8232
Web page: http://www.mcmaster.ca/economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Ross D. Milbourne & Douglas D. & W. David Scoones, 1989. "Unemployment Insurance and Unemployment Dynamics," Working Papers 750, Queen's University, Department of Economics.
- 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..
- Orley Ashenfelter & David Card, 1986. "Why Have Unemployment Rates in Canada and the U.S. Diverged?," NBER Working Papers 1840, National Bureau of Economic Research, Inc.
- Murphy, Kevin M & Welch, Finis, 1993. "Inequality and Relative Wages," American Economic Review, American Economic Association, vol. 83(2), pages 104-109, May.
- 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.
- 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..
- David Card & Richard B. Freeman, 1993. "Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States," NBER Books, National Bureau of Economic Research, Inc, number card93-1, 01.
- Chinhui Juhn & Kevin M. Murphy & Robert H. Topel, 1991. "Why Has the Natural Rate of Unemployment Increased over Time?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 75-142.
- Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
- Burbidge, John B & Magee, Lonnie & Robb, A Leslie, 1997. "Canadian Wage Inequality over the Last Two Decades," Empirical Economics, Springer, vol. 22(2), pages 181-203.
- repec:fth:prinin:352 is not listed on IDEAS Full references (including those not matched with items on IDEAS)