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Labor Market Adjustment in Canada and the United States
Author:
Mr. Alun H. Thomas
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Mr. Eswar S Prasad
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Series:
IMF Working Papers
Volume/Issue:
Volume 1997: Issue 002
Language:
English
Publication Date:
01 Jan 1997
DOI:
https://doi.org/10.5089/9781451841725.001
ISBN:
9781451841725
ISSN:
1018-5941
Pages:
24
Keywords:
WP; UI index; impulse response; employment growth; unemployment insurance; participation rate response; U.S employment; Unemployment rate; Employment; Labor markets; Real wages; Unemployment
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund