1. Unemployment
Trends

2. The idea:
Want to measure how fully a factor (resource) is utilized
A problem:
How would you even define the factor?
People who could produce
How would you measure the factor?
Number of people
Hours worked
Effort x hours?

3. The approach: UR = E/L Labour Force Survey Monthly “did you work?”
“did you look for work?”
UR = E/L

4. It’s not that good a measure:
Inactive seekers (to qualify for EI, e.g.)
Discouraged workers
Underemployed workers
Many possible measures of labour underutilization
Alternative 1: registered as unemployed
Usually only those eligible for benefits care to register
Alternative 2: employment rate
= E/(working-age population)
No guessing the status
Masks the problem
Alternative 3: LFPR
= L/(working-age population)

5. Canadian Trends Unemployment rate: Large short-run fluctuations
Upward trend in long run

6. A flow model Flows and equilibrium Incidence I Duration D UR = I x D
employed
not in labour force
unemployed

7. Canadian Trends Youth unemployment is high Female unemployment
Search for a job that fits
School and such
Trial employment
Short resume
Female unemployment
higher than male in 1970s-80s
About same since
Geographical
UR increases when one goes east
Higher than American UR
Hasn’t always been
Macroeconomics explains part
EI is more generous
Definitions and methodologies

8. Natural rate seems to go up
Kinds of unemployment
Frictional
Seasonal
Structural
Frictional + structural + seasonal = natural rate (full employment)
Cyclical unemployment
Natural rate seems to go up
Demographics EI
Constant restructuring