Identifying Employment
Unemploymentstats are sproduced by stats canada based on the labour force and survey, a monthly survey of the civilian, non -indust populations aged 15 and older in 54,000 households
Based on answers to the questions during the ference week , the adult population is placed into one of threee catefories
Employed
People in paid work, working for a family business without pay, who are not at work due to illness or disability, personal or family responsibilities , parental leave, vacation or a labour dispute.
Unemployed
People avaiblefor work who either had a looked for a job in the 4 weekds beofre the reference week, expect to start a job within the four weeks after the reference week or are on temp layoff and expect to be recalled.
Labour Force
The total number of workers who are either employed or unemployed
Not in the labour force
Peple who are either employed nore unemployed during the reference week, including persons who are unable to work, full time students, retired people, available for work, but who believe no suitable work is thre and so did not look for work. Doing unpaid.
Reasons for joblesness
People become unemployed for a variety of reasons
Some leave employment
For others, the employer initiates job termination
Recessions increase involuntary quits sigs
In 2020, involuntary layoffs increasd from 48 percent in Jan to 82 percent in April
When thre are recessions the share of layoffs as the reason for being unemployed rises and employee-jobs terminations fall
The opposite is true in times of economic expansion: the share of job terminations initatiated by employers falls, while voluntary job quits rises.
Labour force stats
Unemployment rate
The % of the labour force that is unemployed
UR=U/LF*100
Labour force participation rate PR
The percentage of the adult population that is in the labour force
PR=LF/AP*100 = E+U/AP*100
Employment Rate
The percentage of the adult population that is employed
ER=E/AR*100
The Canadian Labour Market at a Glance
Stats can publishes labour force stats and alazyes by various demographic characteristics, including
Age
Sex
Region
Education
Immigant status
Aboriginal status
Full time vs part time
Unemployment rates by sex in 1976-2022
Rates for remales lower since 1990 most females work in the service sector
Strong sector growth relative to the goods-producing sector:2.8 vs 1.6 yearly
Lower unemployment rate relative to the goods-producing sector: 3.4vs 5.5
Unemployment rates by age
Rates for younger workers are significantly higher and pull ther average rate above the rates for the other age groups
Unemployment rates by region
Rates vary across regions
Highest in eastern canada
Lowest in central canada
Lowerst in western canada from 1990-2015, and 1976-1983.
Unemployment rates by education level
For persons aged 25 and older
Negative correlation evident for all years: rates fall as the level of education rises
Unemployment rates by immigrant status
Rates for person born in canada are lower
PRs by age and sex
PRs are lower for remales than for males
Except people aged 15-24
Highest for males and females aged 25-44
Significant for people aged 65 years or older
Labour Force shares by Sex
Females share increased signifcantly until 2008, then stabilized about 5 points below the male share
Reasons for higher female share: technological advances in the home, better birth control, higher levels of university attendance, enhanced parental leave ebenfits, and changing political and social attitudes.
Reasons for lower male share: staying in school longer, retiring early, living longer, psending more time raising children.
Unemployment
In 2022 unemployment lasted about 19 weeks
But averages can hide what is important
Consider 4 unemployed people, 3 are employed after 4 weeks, while the 4th person is unemployed for 52 weeks
The average is 16 weeks but only one person is the problem
Care must be taken when interpreting data on unemployment
The reality is that most people who become enemployed find jobs quickly.
So policy solutions designed to fix unemployment problems should be directed toward those suffering prolonged or repeated spells of employment
Duration of Unemployment
Most spells of unemployment are short
Over 64 percent of unemployed persons found work within 3 months
More females find work this quickly
In 2021 53 percent of unemployed persons found work within 3 months
Recessions increase the duration of unemployment
Regardless a significant portion of unemployed persons take a very long time (6 or mor emonths) to find work
The duration of unemployment varies directly with the actual unemployment rate
Both measures rise during economic downturns, during which flows into unemployment increase, while job vacaancies fall, making it harder to find a job.
As the unemployment rate falls during an expansiosn or ecorvery so too does the duartion of unemployment.
Fewer people looking for work and more jobs making finding a job easy.
UR change vs labour market performance
Does the unemployment rate always reflect what's happening in the labour
Sue lost her job and began looking for a new one
The unemployment rate rises beause sur is now unemployed
Jon a steelworker who has been out of work since his mill closed last year, becomes discouraged and gives up looking for work
Jon is a discouraged searcher
He would like to work but was unemployed for the past year and has now left the labour force
The unemployment rate falls because he is no longer unemployed
This means that the labour market is improving but it is not -> Indicator not OK
Sam the sole earner of the family of 5 just lost his 80,000 job and immediately took a part time job at mcds until he could find another job.
His status does not change
But his employment is now pt instead of ft
The unemployment rate is not a perfect indicator of labour market performance
It does not always reflect how weel the labour market performs
No change in unemployment rate can be negative ofr some workers
For underemployed people
A fall in the employment rate can be harmful to some workers
Discouraged workers
It is somethimes diffuclt to distinguish aooooung people who are unemployed and people not in the labour forced which makes the unemployment rate a bit less accurate.
Discouraged workers might better be classified as unemployed
Some people misrepresent their labour market status by claiming to be unemployed when they are not.
Alternative unemployment rate
In addition to the offical unemployment rate stats can provides alternatives measures of unemployment that includes:
Discouraged searchers
Involuntary part timers
People waiting to be recalled from a prior job, for replies from submitted jobs, or ofr a job to start 5 weeks or more into the future
Comparing alternative unemployment rates
The measures of unemployment rises and falls together
So if we want to use unemployment as an indicator of overall economic condidiotns it doesn't matter much which we use
Alternative measures of the eunemployment rate can be significantly higher than the official number
The methodology Canada and the US use to calculate their official unemployment rates differs despite both countries' following International Labour Organization standards and aksing similar questions to determine labour fore classifications
When stats can adjusts its calcs to remove those diffs
The Natural rate of unemployment
The unemployment rate to which the economy tends to return in the long run
The natural rate of unemployment consists of
Firctional unemployment- It takes time to search for the right job
The labour market is always in a state of flux
Some people are moving and changing jobs others are lookings jobs for the first time
Some firms are expanding and hiring new workers other have lost and have to fire people.
Arises from mathcing workers with the right jobs
Workers have different skills and tastes and jobs have different skill requirements
It takes time for people to find the right new job. And a firm to dind the right new employee and there will always be some frictional unemployment from job search
Is a natural and healthy part of a dynamic economy and is short term for most workers
Cyclical unemployment
Short run flucs in unemployment from its natural rate associated with business cycles
However, when the economy is:
Expanding the demand for albour increases and unemployment decreases
Contrancting, the demand for albour decrases and unemployment increases
Structural unemployment
The economy is alwas changing
Sector shifts-changes in the composition of the demand for labour across industries or regions of a economy
Even when aggregate demand is constant some firms are gorwing and hiring labour while others are contracting and laying workers off
Sectoral shifts ossasioned by tech changes, increased import competition, and shifts in consumer demand can alter the skills requirements for jobs and result in a shortfall of skilled workers realtive to available jovs
Displaced workers, often older and less educated workes, search for new jobs approropriate for their skills and tastes but those skills are no longer in demand.
This is structural unemployment: unemployment associated with changing skills requirements insustresi and regions of a country
As the frequency of sectroal shifts increases, so too does the structral unemployment and unemployment rate.
Reducing search unemployment
Search employment is the time spent looking for employment: finding out about jobs, being interviewed, determining if the job Isa good match in terms of skills preferences and skills
Employment or placement acgies both lublc and private about jobs to speed the matching of workers and jobs
Employment websites
Employment agencies and websites make information abouts more readily accessible reduce the time it takes for workers and employers t find each other, and increase the rate of job finding.
Their services reduce search unemployment and the natural unemployment rate
Public training programs aim to equip workers displaced from declining indistries with the skills needed.
Employment Insurance
A federal program that provides temp fiance assistance to the unemployed
Candains who have lose their job thought no fault of their own while they look for work or upgrade their skills
Workers pay into the program to obtain benefits
EI benfits are taxable
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