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Can a Matching Model Explain the Long-Run Increase in Canada's Unemployment Rate?

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  • Andreas Hornstein
  • Mingwei Yuan

Abstract

The authors construct a simple general equilibrium model of unemployment and calibrate it to the Canadian economy. Job creation and destruction are endogenous. In this model, they consider several potential factors that could contribute to the long-run increase in the Canadian unempoloyment rate: a more generous unemployment insurance system, higher layoff costs, higher discretionary taxes, and a slower rate of productivity growth. They find that in the model economy the impact of all of these factors on the unemployment rate is small.

Suggested Citation

  • Andreas Hornstein & Mingwei Yuan, 1998. "Can a Matching Model Explain the Long-Run Increase in Canada's Unemployment Rate?," Staff Working Papers 98-19, Bank of Canada.
    • Handle: RePEc:bca:bocawp:98-19
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    References listed on IDEAS

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    Cited by:

    1. Tripier, Fabien, 2004. "Can the labor market search model explain the fluctuations of allocations of time?," Economic Modelling, Elsevier, vol. 21(1), pages 131-146, January.
    2. Den Haan, Wouter J. & Kaltenbrunner, Georg, 2009. "Anticipated growth and business cycles in matching models," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 309-327, April.
    3. Tüzemen, Didem, 2017. "Labor market dynamics with endogenous labor force participation and on-the-job search," Journal of Economic Dynamics and Control, Elsevier, vol. 75(C), pages 28-51.

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    More about this item

    Keywords

    Economic Models; Fiscal Policy; Labour Markets;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • J4 - Labor and Demographic Economics - - Particular Labor Markets

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