BibTeX
@MISC{_structuralinfluences,
author = {},
title = {Structural Influences on Participation Rates: A Canada-U.S. Comparison},
year = {}
}
Share
 |
 |
 |
 |
||
OpenURL
Abstract
understanding of what drives the participation rate is necessary for the projection of labour force growth, a key input into the determination of the economy’s production potential. 1 The sharp drop in the participation rate in Canada in the 1990s has given rise to considerable debate about its cause and if it was reasonable to have expected it to have returned to its pre-recession peak. If that peak is the appropriate reference point, then the implications are that labour market slack is considerably larger than the present unemployment rate suggests. While the severity of the 1990-91 recession in Canada and the subsequent underachievement of real GDP relative to potential caused much of the decline and subsequent stagnation of the aggregate participation rate, structural developments and compositional shifts among various subgroups of the population of labour force age, which were under way before 1989, also exerted downward pressure. The purpose of this article is to identify those supply side developments that could have accounted for part of the decline in the participation rate since 1989. 2 Although this approach does not include an analysis of demand side factors, cyclical effects are noted. The much worse performance of the Canadian participation rate than its U.S. counterpart in the 1990s, after the similarities of the preceding 15 years, suggests that using the U.S. labour market experience as a benchmark for Canada may shed some light on the situation, especially since the United States has been operating at full capacity for some time. Econometric estimation of participation rates is hampered by the presence of many influences that are difficult to measure, such as changes in the availability of private and public pension plans, family relationships and structures, and the costs of and subsidies to education. 3 If these influences cannot be specifically modelled, projections based on such estimations will be unreliable.
Keyphrases
participation rate structural influence 1990-91 recession subsequent underachievement pre-recession peak appropriate reference point structural development many influence economy production potential sharp drop subsequent stagnation aggregate participation rate public pension plan supply side development labour market slack u.s. counterpart full capacity u.s. labour market experience downward pressure various subgroup real gdp relative compositional shift demand side factor cyclical effect present unemployment rate suggests labour force age canadian participation rate key input econometric estimation labour force growth united state family relationship considerable debate
