The Unemployment Gap: Results, New Questions, and Policy Implications

John Helliwell

Canadian Public Policy, 1998, vol. 24, issue s1, 264-270

Abstract: The unemployment rate gap between Canada and the United States poses not one puzzle but two: why the gap arose in the 1980s, and then why it persisted and grew in the 1990s? With respect to the 1980s, the evidence marshalled by Riddell and others showed that employment grew at similar rates in Canada and the United States, while labour force participation grew much faster in Canada. The unemployment insurance system was given a key role in explaining this difference. In the 1990s, the unemployment insurance systems have become more similar, and the Canadian participation rate has fallen. But the unemployment gap has grown rather than shrunk, requiring a new set of explanations. Cyclical differences have a role to play here, but are not likely to be large enough to do the trick. The growing difference in unionization rates may also have a role to play. The 1990s gap remains a puzzle.

Date: 1998
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