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I thank Canadian officials who participated at a seminar at Finance Canada, as well as Tamim Bayoumi and Marcelo Estevao for comments. Natalia Andrea Barrera Tovar provided excellent research assistance.
I thank Leonard Landry of the Business and Labor Market Analysis Division of Statistics Canada for providing me with the LEAP data.
The sectors are classified using an aggregated version of NAICS codes.
As a robustness check, I compared the actual U.S. annual data for 1998–2001, from which period the conversion factors were calculated for the rest of the sample, and the Canadian data. Overall job reallocation rates were significantly higher in the United States, not just because of higher rates of job reallocation associated with births and deaths, but higher job reallocation at continuing firms as well.
As there are no lagged dependent variables nor endogeneity issues given the use of dummy variables, simple OLS regressions are sufficient for the purposes of the analysis.
Similar results are obtained if I use job creation or destruction instead of reallocation, and if I use real GDP growth instead of the time dummies.