Labor Market Adjustment in Canada and the United States
January 1, 1997
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Summary
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.
Subject: Employment, Labor, Labor markets, Real wages, Unemployment, Unemployment rate
Keywords: Employment, employment growth, impulse response, Labor markets, participation rate response, Real wages, U.S employment, UI index, Unemployment, unemployment insurance, Unemployment rate, WP
Pages:
24
Volume:
1997
DOI:
Issue:
002
Series:
Working Paper No. 1997/002
Stock No:
WPIEA0021997
ISBN:
9781451841725
ISSN:
1018-5941
