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Structural Determinants of the Natural Rate of Unemployment in Canada

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  • David T. Coe

    (International Monetary Fund)

Abstract

Empirical estimates are presented of the policy and structural determinants of the natural rate of unemployment in Canada. The structural features of the economy that impinge on the adjustment of real wages to their equilibrium level are discussed, and estimates are presented showing how the generosity of the unemployment insurance system is related to past levels of unemployment. The empirical results indicate that government policies have been largely responsible for changes in the natural rate, and, hence, they can contribute to a reduction in the natural rate in the medium term.

Suggested Citation

  • David T. Coe, 1990. "Structural Determinants of the Natural Rate of Unemployment in Canada," IMF Staff Papers, Palgrave Macmillan, vol. 37(1), pages 94-115, March.
    • Handle: RePEc:pal:imfstp:v:37:y:1990:i:1:p:94-115
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    References listed on IDEAS

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    1. Lucie Samson, 1985. "A Study of the Impact of Sectoral Shifts on Aggregate Unemployment in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 518-530, August.
    2. Lindbeck, Assar & Snower, Dennis J, 1988. "Cooperation, Harassment, and Involuntary Unemployment: An Insider-Outsider Approach," American Economic Review, American Economic Association, vol. 78(1), pages 167-188, March.
    3. Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," NBER Chapters, in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90, National Bureau of Economic Research, Inc.
    4. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
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    Cited by:

    1. Stephen S. Poloz, "undated". "The Causes of Unemployment in Canada: A Review of the Evidence," Staff Working Papers 94-11, Bank of Canada.
    2. Charles Adams & David T. Coe, 1990. "A Systems Approach to Estimating the Natural Rate of Unemployment and Potential Output for the United States," IMF Staff Papers, Palgrave Macmillan, vol. 37(2), pages 232-293, June.
    3. Stephen S. Poloz, 1995. "The Causes of Unemployment in Canada: A Review of the Evidence," Macroeconomics 9502002, University Library of Munich, Germany.
    4. Robert Dixon & G. C. Lim & Jan C. van Ours, 2017. "Revisiting the Okun relationship," Applied Economics, Taylor & Francis Journals, vol. 49(28), pages 2749-2765, June.
    5. Lise Pichette, 1998. "La politique monétaire a-t-elle des effets asymétriques sur l'emploi?," Staff Working Papers 98-17, Bank of Canada.
    6. Robert Amano & Tony S. Wirjanto, "undated". "An Empirical Investigation into Government Spending and Private Sector Behaviour," Staff Working Papers 94-8, Bank of Canada.
    7. Victor Claar, 2006. "Is the NAIRU more useful in forecasting inflation than the natural rate of unemployment?," Applied Economics, Taylor & Francis Journals, vol. 38(18), pages 2179-2189.
    8. Denise Côté & Doug Hostland, 1996. "An Econometric Examination of the Trend Unemployment Rate in Canada," Staff Working Papers 96-7, Bank of Canada.
    9. Beatriz Rodríguez Prado, 1995. "La tasa natural de desempleo en la economía española: un intento de cuantificación," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 3, pages 133-151, Junio.
    10. Cousineau, Jean-Michel, 1991. "L’effet du salaire minimum sur le chômage des jeunes et des femmes au Québec : une réestimation et un réexamen de la question," L'Actualité Economique, Société Canadienne de Science Economique, vol. 67(2), pages 144-165, juin.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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