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Unemployment Insurance and Unemployment Dynamics

Author

Listed:
  • Ross D. Milbourne
  • Douglas D. Purvis
  • W. David Scoones

Abstract

One of the puzzling features of the recent behavior of the Canadian unemployment rate is its persistence in the presence of a sustained expansion in real national income. Neither deficient aggregate demand nor a once-for-all, supply-side-induced increase in the natural rate provides a convincing explanation of this phenomenon. This paper presents a model that explains how aspects of unemployment insurance in Canada will cause persistence: unemployment will be highly serially correlated even if output is not. The authors document the increased persistence of the unemployment rate since 1977 and show that the model accounts for much of this phenomenon.

Suggested Citation

  • Ross D. Milbourne & Douglas D. Purvis & W. David Scoones, 1991. "Unemployment Insurance and Unemployment Dynamics," Canadian Journal of Economics, Canadian Economics Association, vol. 24(4), pages 804-826, November.
    • Handle: RePEc:cje:issued:v:24:y:1991:i:4:p:804-26
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    Cited by:

    1. Ferrall, Christopher, 1997. "Unemployment Insurance Eligibility and the School-to-Work Transition in Canada and the United States," Journal of Business & Economic Statistics, American Statistical Association, vol. 15(2), pages 115-129, April.
    2. Stephen S. Poloz, "undated". "The Causes of Unemployment in Canada: A Review of the Evidence," Staff Working Papers 94-11, Bank of Canada.
    3. repec:qed:wpaper:904 is not listed on IDEAS
    4. Peter Kuhn & A. Leslie Robb, 1998. "Shifting Skill Demand and the Canada-US Unemployment Gap: Evidence from Prime-Age Men," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 170-191, February.
    5. Stephen S. Poloz, 1995. "The Causes of Unemployment in Canada: A Review of the Evidence," Macroeconomics 9502002, University Library of Munich, Germany.
    6. Laura Brown & Christopher Ferrall, 2003. "Unemployment insurance and the business cycle," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 863-894, August.
    7. Michael Baker & Miles Corak & Andrew Heisz, 1998. "The Labour Market Dynamics of Unemployment Rates in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 72-89, February.
    8. David Card & W. Craig Riddell, 1993. "A Comparative Analysis of Unemployment in Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 149-190, National Bureau of Economic Research, Inc.
    9. Firouz Fallahi & Gabriel Rodríguez, 2011. "Persistence of Unemployment in the Canadian Provinces," International Regional Science Review, , vol. 34(4), pages 438-458, October.
    10. Kevin Lang & Jay Zagorsky, 1998. "Why are Canadian and US Unemployment Rates So Highly Correlated?," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 56-71, February.
    11. Manfred Keil & Louis Pantuosco, 1998. "Canadian and US Unemployment Rates: A Comparison Based on Regional Data," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 38-55, February.
    12. Koustas, Zisimos, 1998. "Canadian Evidence on Long-Run Neutrality Propositions," Journal of Macroeconomics, Elsevier, vol. 20(2), pages 397-411, April.
    13. Heisz, Andrew & Baker, Michael & Corak, Miles, 1996. "Unemployment in the Stock and Flow," Analytical Studies Branch Research Paper Series 1997097e, Statistics Canada, Analytical Studies Branch.
    14. Robert Amano & Tony S. Wirjanto, "undated". "An Empirical Investigation into Government Spending and Private Sector Behaviour," Staff Working Papers 94-8, Bank of Canada.
    15. Denise Côté & Doug Hostland, 1996. "An Econometric Examination of the Trend Unemployment Rate in Canada," Staff Working Papers 96-7, Bank of Canada.
    16. Hassan Bougrine & Mario Seccareccia, 1999. "Unemployment Insurance and Unemployment: An analysis of the aggregate demand-side effects for postwar Canada," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(1), pages 5-21.
    17. Guillaume Rocheteau, 1999. "Can an Unemployment Insurance System Generate Multiple Natural Rates?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 6(3), pages 379-387, August.

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