Structural Determinants of the Natural Rate of Unemployment in Canada

Coe, David T. (1989): Structural Determinants of the Natural Rate of Unemployment in Canada.

Abstract

This paper presents empirical estimates of the policy and structural determinants of the natural rate of unemployment in Canada. The paper begins with a discussion of structural features of the economy which impinge on the adjustment of real wages to their equilibrium level. Estimates are presented showing how the generosity of the unemployment insurance system is related to past levels of unemployment. The empirical results indicate that government policies have been largely responsible for changes in the natrual rate, and hence can contribute to a reduction in the natural rate in the medium term.

• Item Type: MPRA Paper
• Language: English
• Keywords: Natural rate of unemployment; Canada
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity

References

Blanchard, O. and L. Summers, 1986, "Hysteresis and the European Unemployment Problem," in S. Fischer (ed.), NBER Macroeconomics Annual (MIT Press).

Samson, L., 1985, "A Study of the Impact of Sectoral Shifts on Aggregated Unemployment in Canada," Canadian Journal of Economics.

Lindbeck, A. and D. Snower, 1988, "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," American Economic Review.