How Much of Canada's Unemployment Is Structural?

Abstract

This paper starts from the definition that unemployment occurs when workers are unable to fill available jobs because they lack the skills, do not live where jobs are available, or are unwilling to work at the wage rate offered in the market. This implies that the number of vacancies in the Canadian labour market is an upper bound to the extent of unemployment. The paper summarizes available estimates of the vacancy rate in Canada. In the high technology sector, vacancies may be equivalent to 2.2 percent of the labour force but evidence from more respresentative surveys indicates a range of 0.45 to 0.75 percent for the economy as a whole. Although during the 1980s the outward shift in the relationship between the Help-Wanted Index and the unemployment rate raised concerns that structural unemployment was an increasing problem in Canada, that shift has been reversed in the 1990s.