IDEAS home Printed from https://ideas.repec.org/a/bla/coecpo/v6y1988i1p39-55.html
   My bibliography  Save this article

Drifting Apart: Canadian And U.S. Labor Markets

Author

Listed:
  • HERBERT G. GRUBEL

Abstract

Canadian and U.S. unemployment rates moved together within a narrow margin from 1961 to the mid‐1970s. Since then, Canadian rates have exceeded U.S. rates by large margins—at times as much as 3 percentage points. Throughout this period, interest rates in the two countries have been nearly identical. Aggregate demand stimulation by government deficits has been greater in Canada than in the U.S., and the trade surplus in Canada has added to demand while the trade deficit in the U.S. has subtracted from demand. Therefore, it seems that conventional Keynesian arguments cannot explain the recent differences in unemployment rates. Differences in labor market developments, however, can do so. During a period when real wages rose 35 percent in Canada, they fell 5 percent in the U.S. Since the recession of 1981, U.S. wages have dropped while Canadian wages have remained constant. Differences in labor productivity do not account for these developments. A strong case exists for the argument that the different paths of unemployment rates are due to different paths of real wage developments. It is argued that the causes for these differences in labor market conditions are associated with substantial growth and decreases in unionization rates in Canada and the U.S., respectively. In addition, the unemployment insurance system in Canada is shown to be considerably more generous than that in the U.S.

Suggested Citation

  • Herbert G. Grubel, 1988. "Drifting Apart: Canadian And U.S. Labor Markets," Contemporary Economic Policy, Western Economic Association International, vol. 6(1), pages 39-55, January.
  • Handle: RePEc:bla:coecpo:v:6:y:1988:i:1:p:39-55
    DOI: 10.1111/j.1465-7287.1988.tb00277.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1465-7287.1988.tb00277.x
    Download Restriction: no

    File URL: https://libkey.io/10.1111/j.1465-7287.1988.tb00277.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lindbeck, Assar & Snower, Dennis J, 1985. "Explanations of Unemployment," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 1(2), pages 34-59, Summer.
    2. Herbert G. Grubel & Dennis R. Maki & Shelley Sax, 1975. "Real and Insurance-Induced Unemployment in Canada: A Reply," Canadian Journal of Economics, Canadian Economics Association, vol. 8(4), pages 603-605, November.
    3. John F. Helliwell, 1984. "Stagflation and Productivity Decline in Canada, 1974-82," Canadian Journal of Economics, Canadian Economics Association, vol. 17(2), pages 191-216, May.
    4. Herbert Grubel & Dennis Maki, 1976. "The effects of unemployment benefits on U. S. Unemployment rates," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 112(2), pages 274-299, June.
    5. Herbert G. Grubel & Dennis R. Maki & Shelley Sax, 1975. "Real and Insurance-Induced Unemployment in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 8(2), pages 174-191, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vijlbrief, J.A., 1990. "The effects of unemployment insurance on the labour market," Serie Research Memoranda 0031, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    2. S. F. Kaliski, 1976. "People, Jobs, and the 'New Unemployment'," Canadian Public Policy, University of Toronto Press, vol. 2(3), pages 497-502, Summer.
    3. Walter Block, 1988. "Economics Of The Canadian Bishops," Contemporary Economic Policy, Western Economic Association International, vol. 6(1), pages 56-68, January.
    4. Grady, Patrick, 1986. "Background Paper on Full Employment," MPRA Paper 26328, University Library of Munich, Germany.
    5. Anabela Carneiro & Pedro Portugal, 2004. "Market Power, Dismissal Threat, and Rent Sharing: the Role of Insider and Outsider Forces in Wage Bargaining," CEF.UP Working Papers 0403, Universidade do Porto, Faculdade de Economia do Porto.
    6. Helliwell, John F. & Sturm, Peter H. & Salou, Gerard, 1985. "International comparison of the sources of productivity slowdown 1973-1982," European Economic Review, Elsevier, vol. 28(1-2), pages 157-191.
    7. Daniel S. Hamermesh, 1999. "The Art of Labormetrics," NBER Working Papers 6927, National Bureau of Economic Research, Inc.
    8. Alan Harrison & Robert Hart, 1983. "Unemployment benefits and labor supply : A note," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 119(1), pages 169-172, March.
    9. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.
    10. Daniel S. Hamermesh, 1980. "Transfers, Taxes, and the NAIRU," NBER Working Papers 0548, National Bureau of Economic Research, Inc.
    11. Hung, N. M. & Lefebvre, P., 1981. "Sur l’impact de l’assurance-chômage dans une économie keynésienneOn the impact of unemployment insurance in a Keynesian economy," L'Actualité Economique, Société Canadienne de Science Economique, vol. 57(4), pages 525-552, octobre-d.
    12. Lehmann, Christian, 2011. "Bestimmungsgründe für die Beschäftigung und Rekrutierung von Älteren sowie für das Angebot an altersspezifischen Personalmaßnahmen," CIW Discussion Papers 8/2011, University of Münster, Center for Interdisciplinary Economics (CIW).
    13. Marcelin Joanis & Fernand Martin & Suzie St-Cerny, 2004. "Quel avenir pour les politiques de développement régional au Québec ? (Version mise à jour le 9 août 2004)," CIRANO Project Reports 2004rp-05, CIRANO.
    14. Michel De Vroey, 1987. "La possibilité d'une économie décentralisée. Esquisse d'une alternative à la théorie de l'équilibre général," Revue Économique, Programme National Persée, vol. 38(4), pages 773-806.
    15. Wolfgang Franz, 1979. "The Duration of Youth Unemployment in West Germany: Some Theoretical Considerations," NBER Working Papers 0397, National Bureau of Economic Research, Inc.
    16. Guindon, Denis, 1982. "Les sources de la détérioration de la position relative des jeunes et des femmes sur le marché du travail au Québec," L'Actualité Economique, Société Canadienne de Science Economique, vol. 58(4), pages 403-418, décembre.
    17. Pierre Cahuc & Patrick Sevestre & Hélène Zajdela, 1990. "Négociations salariales et segmentation du marché du travail," Économie et Prévision, Programme National Persée, vol. 92(1), pages 43-50.
    18. Brian Hillier, 1985. "Unemployment benefits and labor supply: A note on the theoretical foundations," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 121(2), pages 315-320, June.
    19. Guglielmo Maria Caporale & Luis Gil-Alana, 2018. "The asymmetric behaviour of spanish unemployment persistence," Economics Bulletin, AccessEcon, vol. 38(1), pages 98-104.
    20. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:coecpo:v:6:y:1988:i:1:p:39-55. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.