Unemployment Trends

The idea: Want to measure how fully a factor (resource) is utilized A problem: How would you even define the factor? People who could produce How would you measure the factor? Number of people Hours worked Effort x hours?

The approach: UR = E/L Labour Force Survey Monthly “did you work?” “did you look for work?” UR = E/L

It’s not that good a measure: Inactive seekers (to qualify for EI, e.g.) Discouraged workers Underemployed workers Many possible measures of labour underutilization Alternative 1: registered as unemployed Usually only those eligible for benefits care to register Alternative 2: employment rate = E/(working-age population) No guessing the status Masks the problem Alternative 3: LFPR = L/(working-age population)

Canadian Trends Unemployment rate: Large short-run fluctuations Upward trend in long run

A flow model Flows and equilibrium Incidence I Duration D UR = I x D employed not in labour force unemployed

Canadian Trends Youth unemployment is high Female unemployment Search for a job that fits School and such Trial employment Short resume Female unemployment higher than male in 1970s-80s About same since Geographical UR increases when one goes east Higher than American UR Hasn’t always been Macroeconomics explains part EI is more generous Definitions and methodologies

Natural rate seems to go up Kinds of unemployment Frictional Seasonal Structural Frictional + structural + seasonal = natural rate (full employment) Cyclical unemployment Natural rate seems to go up Demographics EI Constant restructuring