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Chapter Seventeen

Created by: Erica Morrill, M.Ed Fanshawe College

Unemployment: Meaning and Measurement

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Chapter FocusMeasurement of unemployment Incidence and duration of

unemploymentCanadian unemployment trendsDoes unemployment rate accurately

reflect hardship?

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Measuring UnemploymentLabour Force SurveyCensusUnemployment Insurance Claimants

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Canadian ExperienceFluctuated widely between 1921-1996Due to cyclical fluctuations

Great Depression World War II 1957-58

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MeasurementsUnemployment rate

measure of aggregate of labour market activity and degree of utilization

Labour force participation rate Ratio of labour force to working age

population Employment rate

ratio of employment to the population

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Hidden Unemployment/Marginal Labour Force Attachment

Individuals may not be classified as unemployed Discourage worker Workers waiting to be recalled after 6 month

layoffs Individuals working fewer hours than they

wish Temporarily employed

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Labour Force DynamicsFlows between the labour force states

are large compared to the stocksGross flows are huge compared to netMany of the unemployed individuals are

employed next month

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Incidence and Duration of Unemployment

Keys to understanding unemployment flows between states stocks in each state

Incidence of unemployment portion of unemployed at any period

Duration of Unemployment length of time spent in unemployed state

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Changing Perspectives on Unemployment

Understanding unemployment has implications for public policy

Conclusions lengthy spells of unemployment employment is not always found distribution of unemployment

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The Divergence of the Canada and U.S. Unemployment Rates

Postwar period Canada’s unemployment rate tracked the U.S.

Since 1982 permanent or structural difference may be

evident decline in the incidence of unemployment in

U.S. Longer duration of unemployment in Canada

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Unemployment as a Summary Statistic

Unemployment is an labour market indicator aggregate state of the economy tightness/looseness of labour market extent of hardship unutilized labour supply

Imperfect and supplemented with additional measures

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End of Chapter Seventeen