Special CPP Issue on Structural Unemployment

Special Issue on Structural Unemployment
Canadian Public Policy, XXVI Supplement, July 2000

With the decline in demand-deficient unemployment in Canada in recent years, the relative importance of structural unemployment has increased. Further reductions in aggregate unemployment will depend on better structural performance of the Canadian labour market. And strong growth in the available workforce will depend on reductions in structural unemployment. Consequently, the importance of structural labour market policies as a means to lower unemployment and sustain economic growth will increase in the early years of the new millennium.

The origins of this volume go back to 1998 when the Centre for the Study of Living Standards (CSLS) was approached by Finance Canada and Human Resources Development Canada to organize a conference on structural aspects of unemployment. The CSLS commissioned a number of papers from both Canadian and international economists and held a conference on April 22- 23, 1999 in Ottawa. This special issue of Canadian Public Policy/Analyse de Politques contains revised versions of the papers presented at the conference.

The papers in this volume address the themes of the definition of structural unemployment, trends in structural unemployment in the 1990s, the magnitude of labour market mismatch, youth unemployment, lessons for Canada from the international unemployment experience, and policies to reduce structural unemployment.

A key finding is that with the fall in the unemployment rate of the 1990s, the Canadian labour market has encountered no strutural barriers. Indeed, some of the papers in this volume suggest that some further reductions might be possible before significant increases will be experienced in wages and prices. The instititional reforms undertaken by Canada in the 1990s (in particular those affecting the [un]employment insurance system), along with demographic developments (in particular the decline in the proportion of youths and the aging of the baby-boom cohort) have improved the inflation-unemploment trade-off in this country by significantly lowering the structural rate of unemployment.

Andrew Sharpe is the Executive Director of the Centre for the Study of Living Standards, Ottawa.
Timothy C. Sargent is Chief in the Economic Studies and Policy Analysis Division of Finance Canada.

Acknowledgements/Remerciements	Siii
Andrew Sharpe and Timothy C. Sargent Structural Aspects of Unemployment in Canada: Introduction and Overview	S1
*Canada’s Labour Market Performance in the 1990s*
Garnett Picot and Andrew Heisz The Performance of the 1990s Canadian Labour Market	S7
Jim Stanford Canadian Labour Market Developments in International Context: Flexibility, Regulation and Demand	S27
*The Youth Labour Market in the 1990s*
Paul Beaudry, Thomas Lemieux and Daniel Parent What is Happening in the Youth Labour Market in Canada?	S59
Morley Gunderson, Andrew Sharpe and Steven Wald Youth Unemployment in Canada, 1976-1998	S85
*Determinants of Structural Unemployment*
W. Craig Riddell Measuring Unemployment and Structural Unemployment	S101
Timothy C. Sargent Structural Unemployment and Technological Change in Canada, 1990-1999	S109
Pierre Fortin Macroeconomic Unemployment and Structural Unemployment	S125
Gordon Betcherman Structural Unemployment: How Important Are Labour Market Policies and Institutions?	S131
*Labour Market Mismatch and Unemployment*
Lars Osberg and Zhengxi Lin How Much of Canada’s Unemployment Is Structural?	S141
Yves Gingras and Richard Roy Is There a Skill Gap in Canada?	S159
*International Unemployment Experience*
Rebecca M. Blank Strong Employment, Low Inflation: How Has the US Economy Done So Well?	S175
Richard B. Freeman The US Economic Model at Y2K: Lodestar for Advanced Capitalism?	S187
Steve Nickell and Jan van Ours Why Has Unemployment in the Netherlands and the United Kingdom Fallen so Much?	S201
*Policies to Reduce Structural Unemployment*
Sherri Torjman Integrating the Unemployed Through Customized Training	S221
John Greenwood Earnings Supplementation as a Means to Reintegrate the Unemployed	S235

List of Contributors

Paul Beaudry teaches in the Department of Economics at the University of British Columbia and is a research fellow of CIRANO and CIAR.
Gordon Betcherman is a Senior Economist at the World Bank.
Rebecca M. Blank is a former member of the U.S. Council of Economic Advisors and Dean of Public Policy at the University of Michigan.
Pierre Fortin is Professor of Economics at the Universite de Quebec, Montreal.
Richard B. Freeman is Professor of Economics at Harvard University and Director of the Labour Economics Program at the NBER and is also associated with the Centre for Economic Performance at the London School of Economics.
Yves Gingras is Senior Policy Analyst, Learning, Employment and Labour Policy Division, Human Resources Development Canada.
John Greenwood is Director of the Social Research and Demonstration Corporation.
Morley Gunderson is CIBC Professor of Youth Employment at the University of Toronto.
Andrew Heisz is Senior Economist in the Business and Labour Market Analysis Division at Statistics Canada.
Thomas Lemieux, formerly at the Universite de Montreal, is Professor of Economics at the University of British Columbia and a research fellow at CIRANO.
Zhengxi Lin is an Economist in the Business and Labour Market Analysis Division at Statistics Canada.
Steve Nickell is Professor of Economics at the London School of Economics.
Lars Osberg is McCullough Professor of Economics at Dalhousie University.
Daniel Parent teaches in the Department of Economics at McGill University and is a research fellow at CIRANO.
Garnett Picot is Director of the Business and Labour Market Analysis Division at Statistics Canada.
W.Craig Riddell is Professor of Economics at the University of British Columbia.
Richard Roy is Director, Human Capital and Workplace Studies Division at Human Resources Development Canada.
Timothy C. Sargent is Chief, Economic Studies and Policy Analysis Division of Finance Canada.
Andrew Sharpe is Executive Director of the Centre for the Study of Living Standards.
Jim Stanford is an economist with the Canadian Auto Workers.
Sherri Torjman is Vice-President of the Caledon Institute for Social Policy.
Jan van Ours is Professor of Economics at the University of Tilburg in the Netherlands.
Steven Wald is a doctoral student at the Centre for Industrial Relations, University of Toronto.

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