Canadian Labour Market Research Articles

Muslim Women: Negotiations in the Third Space

L'A. porte son attention sur la condition de la femme au sein du monde musulman. Il analyse la notion de «troisieme espace». Il etudie la situation des femmes musulmanes en Europe et au Canada. Il presente un certain nombre de donnees collectees concernant la vie de deux femmes musulmanes installees au Canada et montre comment celles-ci envisagent leur identite

Are Canadians More Likely to Lose Their Jobs in the 1990s?

Canadians are increasingly concerned about rising job instability. Job instability can take various forms and can be measured in numerous ways. As part of a comprehensive research effort to examine job instability, this paper uses the Longitudinal Worker File (LWF) on the separations of Canadian workers from 1978 to 1993 to assess one dimension of job instability--permanent layoffs. The key question addressed in the paper is: Have permanent layoffs in Canada increased in the 1980s and early 1990s as compared to the late 1970s? We examine the time trend of permanent layoffs first by looking at the permanent layoff rate and then by logistic regressions to predict the probability of permanent layoffs. The analysis is undertaken for all workers as well as for particular sub-groups. Created by many complex processes, permanent layoffs are an on-going feature of our economy and not as cyclically sensitive as quits and other means of workforce adjustments used by firms (i.e., temporary layoffs and hirings). Every year, over a million workers are permanently displaced from their jobs, no matter whether in recessions, recovery or expansionary periods. This is as true in the 1980s and early 1990s as in the late 1970s. Permanent layoffs to 1993 have shown no overall sign of an upward trend when compared to earlier years which are comparable in the business cycle. This holds true whether using the raw data or after controlling for changes in the composition of the workforce by gender, age, province, industry and firm size. However, an increase in the probability of permanent layoffs is observed among some particular groups of workers, notably older or higher paid workers, those in the primary sector or in health, education and welfare services. We will have to wait for more recent data to evaluate trends beyond 1993. The data further show that the Canadian labor market adjusts to structural changes more through depressed hirings than increased layoffs. While the risk of permanently losing one?s job, to 1993 at least, is no higher than in earlier comparable periods, the chance of finding a new job is considerably lower, at least in the aggregate. Furthermore, most job creation in the 1990s has been self-employment, where earning may be more unstable than among paid jobs.

The Persistence of Unemployment: Hysteresis in Canadian Labour Markets

The Persistence of Unemployment: Hysteresis in Canadian Labour Markets

Immigrant Families in the Canadian Labour Market

The labour market activity of immigrant and non-immigrant married couples is compared using data from the 1981 and 1991 Canadian Censuses. New evidence is provided on the performance of immigrant men and women in terms of three components of annual earnings: hourly wage rates, hours worked per week, and weeks worked per year. Evidence of intra-family trade-offs of investments in the immigrant husband's career at the expense of investments in the wife's career are not found overall. However, the wife's labour market performance is found to play a major role in the earnings creation of immigrant families. The findings support a family orientation to both the evaluation and the implementation of immigration policies.

Residual Wage Differences by Gender: Bounding the Estimates

In this study, data from the 1986 Canadian labour market activity survey file are used to derive estimates of residual pay differences by sex, using alternative sample specifications as well as var...

The Persistence of Unemployment: Hysteresis in Canadian Labour Markets

The deep recession and slow recovery of the Canadian economy in the 1980s and the lengthy recession of the early 1990s raised serious questions about economic policy making. The steady worsening of Canadian unemployment rates led some economists to doubt the traditional view that the national economy is by nature self-correcting and to endorse the concept of hysteresis - the idea that the unemployment rate may display no tendency to return to an unchanging natural rate. Such hysteresis would have important and far-reaching implications for economic policy, particularly monetary policy. Jones provides an overview of leading theories of hysteresis and examines international and Canadian evidence from both microeconomic and macroeconomic perspectives. He extends the econometric analysis of hysteresis at both the micro and macro levels and concludes that while there is some evidence of dependence in Canada, the overall picture is not one of hysteresis.

Public Policies, Social Institutions, and Earnings Inequality: Canada and the United States, 1970–1995

Economists now agree that, since the early 1970s, there has been an unprecedented surge in income inequality and a polarization of earnings in the United States. Although employment growth in the United States has been strong over the past twenty years, especially when contrasted with Europe, virtually all U.S. studies conclude that the low-wage share of total employment has expanded since the 1970s, even among workers who work year-round and full-time, and there has been a polarization of earnings: more high- and low-wage jobs, and a shrinking middle class. A key indicator of living standards, real wages, has fallen since 1973. The Canadian labor market has evolved somewhat differently since the early 1970s. As has been the case in the United States, real wages in Canada have declined since the mid-1970s, particularly for male workers. Employment growth in Canada, while not quite as robust as in the United States since the 1970s, has exceeded Europe's, although Canada's underlying unemployment rate by the mid-1990s more resembled Europe's than that of the United States. Earnings polarization in Canada, however, has not been nearly as pronounced as it has been in the United States. In fact, there was a marked decline in the low-wage component of the wage structure in Canada's largest provinces during the 1970s, and for Canada as a whole the earnings distribution has been relatively stable since 1980. A comparative analysis of wage trends in Canada and the United States offers an excellent natural laboratory in which to explore the relative influence of factors such as economic restructuring or differing labor market institutions on inequality and overall living standards. Canada and the United States inhabit geographically proximate, increasingly interconnected economic space, with similar industrial and occupational structures and labor force characteristics. Thus we might plausibly expect similar impacts of trends such as global economic integration, deindustrialization, the shift to a service economy, corporate downsizing, and the introduction of new production technologies on the structure of earnings (Card and Freeman 1993a). Yet through the mid-1990s, the wage structure in Canada has remained markedly less polarized than in the United States, leading some to attribute this variation to differences in Canadian and U.S. public policies and labor market institutions (Card and Freeman 1993; Levine 1995). Compared to the United States, Canadian labor markets have historically featured a more generous array of income maintenance programs and other worker benefits, higher rates of unionization, and higher minimum wages. To what extent have these differences permitted Canada to avoid the wage polarization experienced in the United States since the 1970s? On the other hand, has a cost for Canada of these policies and institutions been a version of what some call Eurosclerosis: persistently high unemployment caused by untenably high wages and costly social programs that undercut the competitiveness of firms and limit their ability to hire workers? In short, does the U.S.-Canada comparison reveal, as some claim U.S.-Europe comparisons do, a modern economic tradeoff in which rising inequality and wage disparities are unavoidable prices to be paid for job creation in a competitive, global economy (OECD 1994)? Finally, in the wake of the growing Americanization of Canadian public policy and greater U.S.-Canada trade linkages since the late 1980s, are there signs that U.S.-style wage disparities have begun to surface in Canada? This article is divided into four sections. The first two present evidence on inequality and wage polarization in the United States and Canada since the early 1970s. In section three, I examine more closely differences in public policies and labor market institutions in the two countries that may account for variations in patterns of earnings polarization. Finally, I conclude with a discussion of the policy implications of the U. …

The Gender Wage Gap: A Comparison of Australia and Canada

Using data from the 1989 Canadian Labour Market Activity Survey and, for Australia, the 1989–90 Income Distribution Survey, the authors investigate the reasons for the significantly lower gender wage gap in Australia than in Canada. Key similarities and differences between these two countries, the authors argue, make them a good basis for a “natural experiment” to investigate the effects of different labor market institutions. In particular, Australia has a stronger union movement and a greater degree of centralization in wage determination than Canada, and most of its workers are covered by legally binding minimum working conditions. The authors conclude that several differences between the countries in labor market structure—notably, a lower rate of return to education, a lower rate of return to labor market experience, and a lower level of wage inequality in Australia than in Canada—are largely responsible for the smaller gender wage gap in Australia.

The Gender Wage Gap: A Comparison of Australia and Canada

Using data from the 1989 Canadian Labour Market Activity Survey and, for Australia, the 1989-90 Income Distribution Survey, the authors investigate the reasons for the significantly lower gender wage gap in Australia than in Canada. Key similarities and differences between these two countries, the authors argue, make them a good basis for a natural experiment to investigate the effects of different labor market institutions. In particular, Australia has a stronger union movement and a greater degree of centralization in wage determination than Canada, and most of its workers are covered by legally binding minimum working conditions. The authors conclude that several differences between the countries in labor market structure--notably, a lower rate of return to education, a lower rate of return to labor market experience, and a lower level of wage inequality in Australia than in Canada--are largely responsible for the smaller gender wage gap in Australia.

The Gender Wage Gap: A Comparison of Australia and Canada

Using data from the 1989 Canadian Labour Market Activity Survey and, for Australia, the 1989–90 Income Distribution Survey, the authors investigate the reasons for the significantly lower gender wage gap in Australia than in Canada. Key similarities and differences between these two countries, the authors argue, make them a good basis for a “natural experiment†to investigate the effects of different labor market institutions. In particular, Australia has a stronger union movement and a greater degree of centralization in wage determination than Canada, and most of its workers are covered by legally binding minimum working conditions. The authors conclude that several differences between the countries in labor market structure—notably, a lower rate of return to education, a lower rate of return to labor market experience, and a lower level of wage inequality in Australia than in Canada—are largely responsible for the smaller gender wage gap in Australia.(This abstract was borrowed from another version of this item.)

Does the Level of Occupational Aggregation Affect Estimates of the Gender Wage Gap?

The traditional decomposition of the gender wage gap distinguishes between a component attributable to gender differences in productivity-related characteristics and a residual component that is often taken as a measure of discrimination. This study of data from the 1989 Canadian Labour Market Activity Survey shows that when occupation is treated as a productivity-related characteristic, the proportion of the gender wage gap labeled explained increases with the number of occupational classifications distinguished. However, on the basis of evidence that occupational differences reflect the presence of barriers faced by women attempting to enter male-dominated occupations, the authors conclude that occupation should not be treated as a productivity-related characteristic; and in a decomposition of the gender wage gap that treats occupation as endogenously determined, they find that the level of occupational aggregation has little effect on the size of the “explained” component of the gap.

The Response of Wages to Protective Labor Legislation: Evidence from Canada

Using micro data from the 1986–87 Canadian Labour Market Activity Survey, the author examines the wage effect of laws requiring advance notice of layoffs and in some cases also requiring severance payments to laid-off workers. The results suggest that incumbent workers protected by advance notice and severance pay laws were able to extract higher wages than were incumbent workers unprotected by such laws. There is evidence, however, that the ultimate wage effect differed by workers' union status: starting wages of nonunion workers appear to have fallen to offset the subsequent wage increase, indicating that nonunion workers may “pay for” advance notice and severance pay laws, whereas union workers who were protected by such laws seem to have been able to exploit their bargaining position to increase their lifetime earnings.

The Measurement of Labor Force Dynamics with Longitudinal Data: The Labour Market Activity Survey Filter

This article explores the measurement of labor force dynamics using longitudinal data, focusing in particular on the Canadian Labour Market Activity Survey (LMAS), which represents a potential advance in longitudinal data collection because it measures aspects of dynamics not available in existing panel data such as the Panel Study of Income Dynamics and the National Longitudinal Survey. We examine the implications of the LMAS questionnaire structure-the LMAS filter-for the study of labor market dynamics and undertake simulations to provide a quantitative assessment of the importance of this filter for labor force spells and transitions between labor force states.

Opportunity costs and entrepreneurial activity

We provide empirical support for the hypothesis that the lower the opportunity costs of individuals, the more likely they are to undertake entrepreneurial activity. This prediction emerged from earlier theoretical work in which we modeled the decision of individuals to develop new ventures on their own, seek the backing of a venture capitalist, or remain as paid employees. We use a large sample, drawn from the 1992 Canadian Labor Market Activity Survey. We find that paid employees who choose to leave their employment to become entrepreneurs earned, prior to leaving, substantially less on average then those whose employment status did not change and who remained paid employees throughout the survey period. Specifically, we establish that the wages of those workers who chose to remain paid employees throughout the survey period were, on average, 12% higher than the wages of those who left their employment to become entrepreneurs. To obtain this result, we performed a multivariate regression analysis in which we isolated the effect of employment status by controlling for gender, age, education, marital status, and region of the country. The employment-status coefficient was 2349 ( t = 2.644; p = .008), indicating that new entrepreneurs earned in 1988, on average, $2349 less than paid workers, ceteris paribus. In other words, 1988 paid employees who chose to become entrepreneurs in 1989 and/or 1990 earned, at the time they made the decision to switch, significantly less than those whose employment status did not change and who remained paid employees throughout the survey period. The causality in our result has not been established. It is possible that would-be entrepreneurs are not doing well in their current jobs for reasons that are unrelated to their entrepreneurial attributes or inclination. Their performance may be adversely affected by some coincidental factors. Given that their wages are relatively low, some of these individuals may be seriously considering the development of their own business. Conversely, it is possible that their entrepreneurial abilities and attitudes are such that they do not fit into a corporate setting. These behavioral dimensions may have contributed to poor job performance, relative to their peers. Thus, it is the very fact that they are independent entrepreneurs that causes the compensation differential. If the latter explanation is incorrect and we are left with the former, then it is likely that inasmuch as earnings can be used as a rough indication of the competence or ability of different individuals, our findings could imply that, on average, those employees who choose to become entrepreneurs are less capable than other employed individuals. This could in part explain the high failure rate of new ventures. Future work should be directed at establishing causality more definitely. Such research would contribute to a deeper understanding of some of the reasons for the high failure rate of newly established enterprises.

Structural Imbalances in Canadian Labor Markets

The nature of structural imbalances in the Canadian Labor market is identified by analyzing the relationship between unemployment and job vacancies. Three potential sources of imbalances are examined: (1) the regional nature of the Canadian economy; (2) the rise in the incidence of long-term unemployment (of 12 months or more); and (3) differences in the rate of growth of unemployment across industrial sectors. The major findings are: growing structural imbalances; an increase in long-term unemployment was the major cause of the shift in most cases; both inter-and intraregional effects played a significant role, but interregional disparities were the dominant factor; and the dispersion in employment growth rates across industrial sectors did not seem to play a role.

An aggregate model of the Canadian labor market

The paper develops and estimates a small equilibrium model of the Canadian postwar labor market. The framework is imperfect competition in product and labor markets which, we argue, is forced upon us by the empirical fact that real wages do not on their own explain the business cycle. The framework incorporates on the supply side the effects of both unemployment benefits and the terms of trade. These variables, together with demand side effects, are then used to account Canadian unemployment. A pleasing feature of the model is that it is quite econometrically stable over the turbulent '80s.

The Performance of Immigrants in the Canadian Labor Market

In this article we examine the economic assimilation of immigrants to Canada. We provide new evidence on immigrants who arrived in the 1970s and document an increase in the dispersion of labor market outcomes across immigrants of different vintages over time. Our results confirm U.S. evidence of "permanent" differences across immigrant cohorts. What distinguishes the Canadian experience is small or negative rates of assimilation for most cohorts over the sample period. Finally, we test the overidentification of the assimilation process specified in previous studies and fail to reject the usual cohort fixed-effect specification.

The Changing Labour Market Position of Canadian Immigrants

"This paper uses pooled 1971, 1981, and 1986 Canadian census data to evaluate the extent to which (1) the earnings of Canadian immigrants at the time of immigration fall short of the earnings of comparable Canadian-born individuals, and (2) immigrants' earnings grow more rapidly over time than those of the Canadian born. Variations in the labour market assimilation of immigrants according to their gender and country of origin are also analysed. The results suggest that recent immigrant cohorts have had more difficulty being assimilated into the Canadian labour market than earlier ones, an apparent consequence of recent changes in Canadian immigration policy, labour market discrimination against visible minorities, and the prolonged recession of the early 1980s." (SUMMARY IN FRE)

The Canadian Labor Market: Developments, Prospects, and Policy

This paper examines recent developments in the Canadian labor market. Using disaggregated labor market data, various hypotheses concerning the slow employment growth and rise in unemployment since 1990 are evaluated. The analysis indicates that a large part of the recent rise in the unemployment rate may reflect an increase in the structural rather than the cyclical component of unemployment. Various sources of labor market rigidities that may have contributed to the increase in structural unemployment are examined. In particular, the role of the unemployment insurance system in contributing to labor market rigidity and measures for reforming this system, including the recent proposals of the government, are discussed. Finally, this paper examines active labor market policies that could help to alleviate structural unemployment.

The Canadian Labor Market: Developments, Prospects, and Policy

This paper examines recent developments in the Canadian labor market. Using disaggregated labor market data, various hypotheses concerning the slow employment growth and rise in unemployment since 1990 are evaluated. The analysis indicates that a large part of the recent rise in the unemployment rate may reflect an increase in the structural rather than the cyclical component of unemployment. Various sources of labor market rigidities that may have contributed to the increase in structural unemployment are examined. In particular, the role of the unemployment insurance system in contributing to labor market rigidity and measures for reforming this system, including the recent proposals of the government, are discussed. Finally, this paper examines active labor market policies that could help to alleviate structural unemployment.