## Endogeneity in Structural Unemployment Equations: The Case of Canada

_IMF Working Papers, December 1, 1993_

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## Bibliographic details
- Published: December 1, 1993
- Series: IMF Working Papers

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### Research question and scope
- Examines the endogeneity of structural variables in unemployment rate equations for Canada.
- Structural variables studied: the generosity of unemployment benefits, nonwage labor costs, the relative minimum wage, and the degree of unionization.
- Uses causality tests to detect reverse causality and employs instruments suggested by the empirical analysis to estimate the structural unemployment rate equation.

### Methodology
- Conducts causality tests to identify reverse causality affecting the structural variables.
- Estimates the structural unemployment rate equation using instruments derived from the empirical analysis of the structural variables.

### Core findings
- Finds evidence of reverse causality for the structural variables based on causality tests.
- Confirms that:
  - The generosity of unemployment benefits has a significant positive impact on the unemployment rate.
  - Nonwage labor costs have a significant positive impact on the unemployment rate.
  - The relative minimum wage has a significant positive impact on the unemployment rate.
- Fails to find an effect for the degree of unionization on the unemployment rate.

### Subject classification and keywords
- Subject: Labor, Labor costs, Labor unions, Minimum wages, Unemployment, Unemployment rate
- Keywords: Labor costs, Labor unions, Minimum wages, replacement rate, UI account, UI premium, UI reform, UI system, Unemployment, unemployment equation, Unemployment rate, unemployment rate equation, WP

### Publication and document metadata (selected)
- Pages: 30
- Volume: 1993
- Issue: 094
- Series: Working Paper No. 1993/094
- Stock No: WPIEA0941993
- ISBN: 9781451950694
- ISSN: 1018-5941
- Publication date shown on landing page: December 1, 1993

*International Monetary Fund. "Endogeneity in Structural Unemployment Equations: The Case of Canada", IMF Working Papers 1993, 094 (1993).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/endogeneity-in-structural-unemployment-equations-the-case-of-canada-876_