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Does Unemployment Invariance Hypothesis Hold for Canada?

Author

Listed:
  • Tansel, Aysit
  • Ozdemir, Zeynel Abidin
  • Aksoy, Emre

Abstract

This article explores the long-run relationship between unemployment rate and labor force participation rate in Canada. The cointegration analysis vindicates the existence of a long-run relationship between these two variables. This finding leads us to doubt the pertinence of the unemployment invariance hypothesis for Canada. This is consistent with the empirical studies for Japan, Sweden and the United States, but contradicts the empirical studies for Australia, Romania and Turkey. There are contradictory studies for the United Kingdom.

Suggested Citation

  • Tansel, Aysit & Ozdemir, Zeynel Abidin & Aksoy, Emre, 2016. "Does Unemployment Invariance Hypothesis Hold for Canada?," MPRA Paper 72869, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:72869
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    References listed on IDEAS

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    1. Erik Hjalmarsson & Pär Österholm, 2010. "Testing for cointegration using the Johansen methodology when variables are near-integrated: size distortions and partial remedies," Empirical Economics, Springer, vol. 39(1), pages 51-76, August.
    2. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    3. Aysit Tansel & Zeynel Abidin Ozdemir & Emre Aksoy, 2016. "Unemployment and labour force participation in Turkey," Applied Economics Letters, Taylor & Francis Journals, vol. 23(3), pages 184-187, February.
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    8. Gustavsson, Magnus & Osterholm, Par, 2006. "The informational value of unemployment statistics: A note on the time series properties of participation rates," Economics Letters, Elsevier, vol. 92(3), pages 428-433, September.
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    Cited by:

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    2. Congregado, Emilio & Gałecka-Burdziak, Ewa & Golpe, Antonio A. & Pater, Robert, 2021. "Unemployment invariance hypothesis and structural breaks in Poland," The Journal of Economic Asymmetries, Elsevier, vol. 24(C).
    3. Walter Paternesi Meloni & Antonella Stirati, 2021. "What has driven the delinking of wages from productivity? A political economy-based investigation for high-income economies," Working Papers PKWP2104, Post Keynesian Economics Society (PKES).

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    More about this item

    Keywords

    Unemployment Invariance Hypothesis; Unemployment; Labor Force Participation; Cointegration; Canada;
    All these keywords.

    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
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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