The Canada-US Unemployment Rate Gap: A New Look with a New Decomposition for Cross-Country Differences in Unemployment Rates

Michele Campolieti

Canadian Public Policy, 2012, vol. 38, issue 3, 411-435

Abstract: This paper presents a decomposition of the changes in the Canada-US unemployment rate gap using measures of the flow rates into unemployment (the inflow hazard) and out of unemployment (the outflow hazard). The estimates indicate that most of the changes in the unemployment rate gap between 1981 and 2009 are due to changes in the outflow hazard (i.e., the duration of unemployment spells). The relative importance of the inflow and outflow hazard effects on the unemployment rate gap changes over time, but the outflow hazard tends to account for most of the changes in the unemployment rate gap since 1997.

Date: 2012
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