The Weakest Link: Diagnosing the Deterioration of the Youth Labour Market in Canada

Canada's youth labour market has deteriorated sharply since early 2023, with weakness concentrated among teenagers. This report by the Centre for the Study of Living Standards documents the stylized facts of the deterioration and seeks to explain it. By mid-2026, the unemployment rate for 15–19-year-olds exceeded 20%, while teenage employment and participation rates fell to their lowest levels in five decades outside the pandemic. Unemployment spells have lengthened, and quit rates have declined across all age groups. A decomposition exercise shows the rise in youth unemployment was driven almost entirely by weak hiring rather than increased layoffs—a "last-in" rather than "first-out" problem. Regression analysis confirms youth unemployment is more cyclically sensitive than core-age unemployment, but the business cycle alone cannot explain the deterioration. Other contributing factors include falling job vacancies in youth-heavy occupations and industries, strong productivity growth in youth-heavy industries, a shift toward older and more educated workers, and rapid growth in the non-permanent resident population intensifying competition for entry-level jobs.