Template-Type: ReDIF-Chapter 1.0
Author-Name: Andrew Sharpe
Author-Name: Louis Grignon
Title: Symposium on Labour Force Participation in Canada in the 1990s: An Introduction and Overview
Abstract: A major development in the Canadian labour market in the 1990s has been the decline in labour force participation. This issue of Canadian Business Economics consists of a symposium of articles that explore this issue. The idea
for this symposium came out of a December 1997 workshop on labour force participation organized by the Canadian Employment Research Forum. The Centre for the Study of Living Standards and Human Resources Development Canada then organized two sessions on labour force participation at the annual meeting of the Canadian Economics Association in May 1998 where these papers were first presented. The papers were then refereed and revised for publication. This introduction sets the context for the symposium that follows by presenting basic data on labour force participation rate trends and
summarizing and synthesizing the key findings of the five articles.
Book-Title: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)
Provider-Name: Centre for the Study of Living Standards
Provider-Email: info@csls.ca
Provider-Homepage: http://www.csls.ca/
Provider-Postal: 111 Sparks Street, Ste. 500, Ottawa, ON K1P 5B5
Editor-Name: Andrew Sharpe
Editor-Email: andrew.sharpe@csls.ca
Editor-Workplace-Name: Centre for the Study of Living Standards
Editor-Name: Louis Grignon
Pages: 1-11
File-URL: http://www.csls.ca/journals/simp/simp01.pdf
File-Format: Application/pdf
Year: 1999
Classification-JEL: J21, J22, E24, E27, C53, O51
Keywords: Labour Force Participation, Labor Force Participation, Participation Rate, Labour Force Participation Rate, Labor Force Participation Rate, Canada, Living Standards, Standard of Living, Output Gap, Potential Employment, Potential Output, Potential Growth
Handle: RePEc:sls:lfpcbe:01

Template-Type: ReDIF-Chapter 1.0
Author-Name: Mario Fortin
Author-Name: Pierre Fortin
Title: The Changing Labour Force Participation of Canadians, 1969-96: Evidence from a Panel of Six Demographic Groups
Abstract: Cyclical, policy changes, and structural factors have been put forward to explain the decline in labour force participation in Canada in the 1990s. In the first article in the symposium, Pierre Fortin and Mario Fortin attempt to determine the relative importance of these three types of factors by estimating a participation rate equation where the independent variables are an index of job availability (the Help-Wanted Index), the real wage, the real minimum wage, an index of unemployment insurance generosity, real social assistance benefits, and a time trend to capture other structural influences. The equation is estimated for six demographic groups (men and women 15-24, 25-54 and 55 and over) over the 1969-96 period. They find that the drop in the aggregate participation rate in the 1990s was equally due to the three factors: poor macroeconomic conditions, policy
changes in unemployment insurance and the minimum wage, and structural transformations. The explanatory power of the equations is found to be good for the younger and middle-age groups, but poor for the older groups. The equations show no significant shift over the 1990-96 sub-period, implying that the decline in the participation rate in the 1990s should not be attributed to a new structural relationship. In terms of the variables, the authors find that young people, and to a less extent, middle-aged persons, respond positively to cyclical variations in job opportunities, but older persons do not; minimum wages affect negatively the labour force participation of the younger age groups and middle-aged women; UI generosity affects positively only youth participation; and social assistance affects negatively the participation of middle-aged women. The authors use their equations to simulate the impact of changes in cyclical, policy, and structural variables on labour force participation of the six groups in the 1990-97 period. The model can account for 2.6 percentage points of the total 2.7
percentage point decline in the aggregate participation rate between 1989 and 1997. Reduced job availability was responsible for 37 per cent of the decline, increases in the real minimum wage 15 per cent, decreased UI generosity 19 per cent, falls in social assistance benefits made a 4 per cent negative contribution to the decline in participation, and structural factors accounting for the remaining 30 per cent of the decline. These structural factors included rising school attendance, the changing roles of men and women in society, the changing demand and supply of skills, the expansion of public pension plans, and the rising
average age of the 55 and over group. The simulations explained quite well the evolution of labour force participation for all groups except older males. Perhaps surprisingly, none of the large decline in participation of this group was found to be due to reduced job availability. The finding that only about 40 per cent of the decline in labour force participation in the 1990s is cyclical has important implication for the path of potential output. The authors find that whatever the value of the non-accelerating inflation rate of unemployment (nairu), in a non-inflationary cyclical recovery, the participation rate is unlikely to rise more than 0.8 percentage points from the 1997 level of 64.8 per cent.
Book-Title: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)
Provider-Name: Centre for the Study of Living Standards
Provider-Email: info@csls.ca
Provider-Homepage: http://www.csls.ca/
Provider-Postal: 111 Sparks Street, Ste. 500, Ottawa, ON K1P 5B5
Editor-Name: Andrew Sharpe
Editor-Email: andrew.sharpe@csls.ca
Editor-Workplace-Name: Centre for the Study of Living Standards
Editor-Name: Louis Grignon
Pages: 12-24
File-URL: http://www.csls.ca/journals/simp/simp02.pdf
File-Format: Application/pdf
Year: 1999
Classification-JEL: J21, J22, E24, E27, C53, O51
Keywords: Labour Force Participation, Labor Force Participation, Participation Rate, Labour Force Participation Rate, Labor Force Participation Rate, Canada, Output Gap, Potential Employment, Potential Output, Potential Growth, Forecast, Simulation
Handle: RePEc:sls:lfpcbe:02

Template-Type: ReDIF-Chapter 1.0
Author-Name: Irene Ip
Author-Name: Sheryl King
Author-Name: Geneviève Verdier
Title: Structural Influences on Participation Rates: A Canada-U.S. Comparison
Abstract: In contrast to the decline in labour force participation in Canada in the 1990s, the aggregate participation rate in the United States actually rose slightly (up 0.5 percentage points between 1989 and 1997). This US experience provides a useful benchmark for the analysis of the Canadian developments. In the second article of the symposium, Irene Ip, Sheryl King and Geneviève Verdier, while recognizing that cyclical influences have contributed significantly to the
decline in labour force participation in the 1990s in Canada relative to the United States, focus on supply-side factors at play in the behviour of the participation rate in the two countries. A key structural variable influencing youth labour force participation is enrolment rates. As the participation rate of students is below that of non-students, increased enrolment tends to reduce aggregate participation. Enrolment rates for teenagers increased 7 percentage points in Canada between 1989 and 1997, and 5 points in the United States; rates for youth adults increased 11 points in Canada and 7 points in the United States. As the U.S. economy enjoyed low unemployment in both 1989 and 1997, the rise in enrolment rates was related to structural factors, such as the growing recognition of the importance of education for success on the job market. Structural factors were undoubtedly at play in Canada . However, the authors suggest that the increase in enrolment rates beyond that experienced in the United States (29 per cent of the increase in enrolment rates for teens and 36 per cent for young adults) may be interpreted as a cyclical response to weak employment opportunities in Canada. The authors find composition changes in the age structure of the population account for about one percentage point of the decline in the aggregate
participation rate in Canada between 1989 and 1997, as the relative importance of low-participation rate groups has increased. Based on an analysis of the factors affecting labour force participation of the major age-sex groups, the authors forecast a rise in the aggregate participation rate in Canada from 65.1 per cent in 1998 to 66.6 per cent in 2006. For the United States, the Bureau of Labor Statistics is forecasting a smaller increase, but from a higher level, to 67.6 per cent in 2006 from 67.1 per cent in 1998. The authors expect increases in labour force participation for all age-sex groups in Canada. Between 1998 and 2006, the participation rate is forecast to rise 4.6 percentage points for older men (55 and over), 3.8 points for older women, 3.7 points for prime age women, 8.9 points for teenagers, 3.5 points for young adults, and even 1.0 points for prime-aged men. The 1.5 point increase in the aggregate participation rate is much smaller than almost all the increases in the age-sex group specific rates because of the changing age structure, in particular the increasing proportion of the population in older age groups.
Book-Title: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)
Provider-Name: Centre for the Study of Living Standards
Provider-Email: info@csls.ca
Provider-Homepage: http://www.csls.ca/
Provider-Postal: 111 Sparks Street, Ste. 500, Ottawa, ON K1P 5B5
Editor-Name: Andrew Sharpe
Editor-Email: andrew.sharpe@csls.ca
Editor-Workplace-Name: Centre for the Study of Living Standards
Editor-Name: Louis Grignon
Pages: 25-41
File-URL: http://www.csls.ca/journals/simp/simp03.pdf
File-Format: Application/pdf
Year: 1999
Classification-JEL: J21, J22, E24, O51, O57
Keywords: Canada, United States, Labour Force Participation, Labor Force Participation, Participation Rate, Labour Force Participation Rate, Labor Force Participation Rate, Age Structure, Age, Sex, Gender, Aging, Ageing
Handle: RePEc:sls:lfpcbe:03

Template-Type: ReDIF-Chapter 1.0
Author-Name: Bob Dugan
Author-Name: Benoît Robidoux
Title: Demographic Shifts and Labour Force Participation Rates in Canada
Abstract: Labour force participation rates vary greatly by age, with persons 55 and over having much lower participation rates than younger persons. Consequently, changes in the demographic composition of the population can exert a long-run effect on aggregate participation rates. In the third article of the symposium, Bob Dugan and Benoît Robidoux examine the impact of demographic shifts on labour force participation in Canada. They use an accounting framework and plausible trend participation rates for 16 demographic groups with source population estimates to estimate an aggregate structural participation rate for Canada. They find that the ageing of the population has already started to exert downward pressure on the aggregate participation rate in Canada due to longer life expectancy and the resulting growing proportion of the population in the low-participation rate 65 and over age group. The movement of the baby boom generation into the 65 and over group in coming years will intensify this trend. Between 1989 and 1997 they find that the demographic composition effect reduced the aggregate participation rate by almost 1 percentage point, and that from now to 2030 it will reduce the participation rate by an additional 8.5 points. Of course, greater than expected trend increases in labour force participation rates by older age groups could offset some of this composition effect. The authors point out that changes in demographic composition had virtually no effect on the participation rate in the 1990s in the United States as the share of the population 65 and over was stable. This situation reflects the fact that the United States became an “older” society earlier than Canada due to an earlier and smaller baby boom and a higher average age for immigrants. Dugan and Robidoux calculate a trend participation rate of 66.2 in 1997, 1.4 percentage points above the actual rate of 64.8 per cent. Based on this rate they conclude that about one half of the 2.7 point decline in the participation rate in the 1990s was structural and one half cyclical.
Book-Title: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)
Provider-Name: Centre for the Study of Living Standards
Provider-Email: info@csls.ca
Provider-Homepage: http://www.csls.ca/
Provider-Postal: 111 Sparks Street, Ste. 500, Ottawa, ON K1P 5B5
Editor-Name: Andrew Sharpe
Editor-Email: andrew.sharpe@csls.ca
Editor-Workplace-Name: Centre for the Study of Living Standards
Editor-Name: Louis Grignon
Pages: 42-56
File-URL: http://www.csls.ca/journals/simp/simp04.pdf
File-Format: Application/pdf
Year: 1999
Classification-JEL: J21, J22, E24, O51
Keywords: Canada, Labour Force Participation, Labor Force Participation, Participation Rate, Labour Force Participation Rate, Labor Force Participation Rate, Age Structure, Age, Sex, Gender, Aging, Ageing
Handle: RePEc:sls:lfpcbe:04

Template-Type: ReDIF-Chapter 1.0
Author-Name: Paul Beaudry
Author-Name: Thomas Lemieux
Title: Evolution of the Female Labour Force Participation Rate in Canada, 1976-1994: a Cohort Analysis
Abstract: The participation rate of women aged 25-64 rose greatly in the 1970s and 1980s, but has stagnated in the 1990s. In principle, this development could reflect either the poor growth performance of the economy this decade or the completion of the integration of women into the labour force. In the fourth article of this symposium, Paul Beaudry and Thomas Lemieux use a cohort analysis to shed light on the explanation of this stagnation in female labour force participation. Using data from the Survey of Consumer Finances for the 1976-94 period, the authors track the participation rates over time of representative
groups of women who entered the labour force at different points in time. They decompose a cohort’s participation rate into three effects: a macroeconomic effect common across cohorts linked to factors such as recessions and employment
insurance generosity; an age or life-cycle effect; and a cohort-specific effect which shows the differences between cohorts for a given age and macroeconomic effect. The authors find that the cohort effects are likely the dominant factor in explaining the recent stagnation of female participation, just as it explained the large increases in the 1970s and 1980s. The recession of the early 1990s, which according to the authors reduced the female participation rate by 1 percentage point, merely amplified the stagnation phenomenon. As the cohort effects stabilize with the narrowing of the gap between male and female participation rates, the stagnation would have occurred, albeit later in the 1990s, even if more favourable macroeconomic conditions had prevailed. The authors conclude that there is still room for a 2-3 percentage point increase in the participation rate of women 25-64, but the magnitude of the increases of the 1970s and 1980s is not possible as the cohort effects that prevailed then no longer exist. The authors stress that their results are dependent on the amount of flexibility used to capture the cohort effect so that the age profile and its slope can trace both the rise and the flattening of the participation rate by age. They point out that over time participation behaviour of women 25-64 is converging toward that of men, namely, high and flat participation profiles to at least age 55. They also note that the much smaller increase in the female participation rate in the United States in the 1990s relative to the 1970s and 1980s despite the robust U.S. labour market supports their findings as the cohort effects were also levelling out south of the border.
Book-Title: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)
Provider-Name: Centre for the Study of Living Standards
Provider-Email: info@csls.ca
Provider-Homepage: http://www.csls.ca/
Provider-Postal: 111 Sparks Street, Ste. 500, Ottawa, ON K1P 5B5
Editor-Name: Andrew Sharpe
Editor-Email: andrew.sharpe@csls.ca
Editor-Workplace-Name: Centre for the Study of Living Standards
Editor-Name: Louis Grignon
Pages: 57-70
File-URL: http://www.csls.ca/journals/simp/simp05.pdf
File-Format: Application/pdf
Year: 1999
Classification-JEL: J21, J22, E24, E27, C53, O51
Keywords: Canada, Labour Force Participation, Labor Force Participation, Participation Rate, Labour Force Participation Rate, Labor Force Participation Rate, Age Structure, Age, Sex, Gender, Aging, Ageing, Women
Handle: RePEc:sls:lfpcbe:05

Template-Type: ReDIF-Chapter 1.0
Author-Name: Richard Archambault
Author-Name: Louis Grignon
Title: Decline in Youth Participation in Canada in the 1990s: Structural or Cyclical?
Abstract: Of the three major age groups, youth (aged 15-24), experienced the largest fall in labour force participation and accounted for the lion’s share of the aggregate decline. Consequently, an understanding of the factors behind this development is essential to an overall understanding of the fall in labour force participation in the 1990s in Canada. In the fifth and final article in the symposium, Richard Archambault and Louis Grignon examine the causes of this large fall in youth labour force participation in Canada in the 1990s. They disaggregate
the youth participation rate into three components: the student participation rate, the non-student participation rate, and the school enrolment rate. The aggregate youth rate is the sum of the student and non-student rates weighted by
their respective shares of the population (the enrolment rate for students). Such an approach makes it possible to take account of behavioural differences between students and non-students and to treat the enrolment rate as a phenomenon to be explained rather than a determinant of the participation rate. All three variables are modelled as a function of a cyclical variable and a number of structural variables - the real wage, the relative minimum wage, employment insurance, social assistance, and a time trend. The results show the importance of economic conditions and the modest effect of public policy programs on the decision to participate in the labour market and go to school. Based on the equations estimated for the 1976-96 period, a dynamic simulation was conducted over the 1990-96 period to account for the impact of the variables on the student and non-student participation rates and enrolment rate. According to the equations estimated for the 15-24 age group, the cyclical variable accounts for about one half of the decline in the youth participation rate between 1990 and 1996, two thirds of the decline in the student participation rate, and about one third of the fall in both the non-student participation rate and rise in the enrolment rate. The remaining decline in the two participation rates and rise in the enrolment rate are not to any significant degree explained by the four structural
variables, but rather are either captured by the time trend or not explained at all. Given these results, the authors conclude that we have a poor understanding of the non-cyclical forces that account for up to one half of the decline in youth
labour force participation in the 1990s.
Book-Title: A Symposium on Canadian Labour Force Participation in the 1990s (Special Issue of Canadian Business Economics, Volume 7, Number 2, May 1999)
Provider-Name: Centre for the Study of Living Standards
Provider-Email: info@csls.ca
Provider-Homepage: http://www.csls.ca/
Provider-Postal: 111 Sparks Street, Ste. 500, Ottawa, ON K1P 5B5
Editor-Name: Andrew Sharpe
Editor-Email: andrew.sharpe@csls.ca
Editor-Workplace-Name: Centre for the Study of Living Standards
Editor-Name: Louis Grignon
Pages: 71-87
File-URL: http://www.csls.ca/journals/simp/simp06.pdf
File-Format: Application/pdf
Year: 1999
Classification-JEL: J21, J22, E24, E27, C53, O51
Keywords: Canada, Labour Force Participation, Labor Force Participation, Participation Rate, Labour Force Participation Rate, Labor Force Participation Rate, Age Structure, Age, Youth, Teenage, Young Adult, Student, Enrolment Rate, Enrolment, Enrollment Rate, Enrollment
Handle: RePEc:sls:lfpcbe:06