IDEAS home Printed from
   My bibliography  Save this paper

Permanent Layoffs in Canada: Overview and Longitudinal Analysis


  • Lin, Zhengxi
  • Picot, Garnett
  • Pyper, Wendy
  • Zhengxi, Lin


Canadians are increasingly concerned about permanent layoffs, as many feel job instability and the possibility of job loss has increased in the 1990s. Governments, confronted with a large number of permanent layoffs each year, need to know how to respond to improve labour adjustment and the possibility of quickly finding a new job for displaced workers. Within this context, this paper uses a new longitudinal data source on the separations of workers to address three issues. First, has there in fact been an increase in the permanent layoff rate in Canada in the 1990s, as one might anticipate given concerns about rising job instability? Second, what are the underlying causes of most permanent layoffs? The paper explicitly examines the role played by cyclical variation in aggregate demand, variation in industrial demand which is often associated with structural change, and differences in layoff rates by firm size which is in turn associated with the birth and death process of firms. Third, with this as background, the core of the paper asks a question of concern to policy analysts: are most permanent layoffs rare events for workers, or are they a continuation of a pattern of repeat layoffs? This is important because a worker who is confronted with a layoff which is a rare event will require very different post-displacement adjustment assistance from someone whose history of employment has been marked with frequent layoffs, suggesting an inability to hold a job or demand-side instability in the firm or industry in which the person has worked. The workers' employment history over 10 years is used to explore the relationship between permanent layoff history and the probability of being laid off. Displaced workers are classified "low-risk", "medium-risk" and "high-risk" based on their layoff history, and multinomial logistic analysis is used to distinguish worker and firm characteristics associated with repeat layoffs or layoffs as rare events.

Suggested Citation

  • Lin, Zhengxi & Picot, Garnett & Pyper, Wendy & Zhengxi, Lin, 1997. "Permanent Layoffs in Canada: Overview and Longitudinal Analysis," Analytical Studies Branch Research Paper Series 1997103e, Statistics Canada, Analytical Studies Branch.
  • Handle: RePEc:stc:stcp3e:1997103e

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Hall, Robert E & Lazear, Edward P, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 233-257, April.
    2. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
    3. Bound, John & Krueger, Alan B, 1991. "The Extent of Measurement Error in Longitudinal Earnings Data: Do Two Wrongs Make a Right?," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 1-24, January.
    4. Steven J. Davis & John Haltiwanger, 1990. "Gross Job Creation and Destruction: Microeconomic Evidence and Macroeconomic Implications," NBER Chapters,in: NBER Macroeconomics Annual 1990, Volume 5, pages 123-186 National Bureau of Economic Research, Inc.
    5. Miles Corak, 1996. "Unemployment Insurance, Temporary Layoffs, and Recall Expectations," Canadian Journal of Economics, Canadian Economics Association, vol. 29(s1), pages 1-7, April.
    6. McLaughlin, Kenneth J, 1991. "A Theory of Quits and Layoffs with Efficient Turnover," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 1-29, February.
    7. Rene Morissette, 1993. "Canadian Jobs and Firm Size: Do Smaller Firms Pay Less?," Canadian Journal of Economics, Canadian Economics Association, vol. 26(1), pages 159-174, February.
    8. Feldstein, Martin S, 1976. "Temporary Layoffs in the Theory of Unemployment," Journal of Political Economy, University of Chicago Press, vol. 84(5), pages 937-957, October.
    9. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
    Full references (including those not matched with items on IDEAS)


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:stc:stcp3e:1997103e. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Brown). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.