File 21: institution vs technology

Question 1

What explains why trends and levels of labour market differ across OECD countries?

Answer 1

difference in institution matters that are as important as technology (technology remains the same in all OECD countries)

Question 2

Describe the trends in unemployment rates in Canada and US that illustrate the roles that can be played by insitutions on labor markets? (4)

Answer 2

1. until 1980: they had similar rates
2. 1980-2004: canada had higer rates by about 2-4%
3. if it werent for the commodities boom in the 1970s: canada’s unemployment rate might have risen earlier than USA

Question 3

What were the difficulties of that make the comparison between the unemployment rate of Canada vs USA? (5)

Answer 3

effects on canadian unemployment were converted to US effects:
1. looking for work questions
2. assignment of short term future starts
3. assignment of full time students looking for work
4. exclusion of natives people reserves
5. differential imprisonment
=> summing these effects of these measurement were difficult: if canada had the same practices as the us bureau of labor statistics: its unemployment rate would only be 0.8 lower!

Question 4

What explains the rise of canadian unemployment rate relative to the US? (6)

Answer 4

due the Unemployment insurance in 1971: the Act: (more generous than the states)

1. extended coverage to 96% paid employees
2. duration of employment gave you benefits: duration of benefits after unemployed depends on regional unemployment rate
3. those without dependents: replacement rate of 66% of insurable earnings
4. those with dependents: replacement rate of 75% (who had low previous earnings or who had been on benefit for more than 18 weeks)
5. act introduced administrative right to impose experience rating on employers but abandone
6. special program for fishersq

Question 5

What evidence is there to tie the relative rise in the Canadian unemployment rate to the provisions of the 1971 UI reform?(5)

Answer 5

1. ethnography with high rates of unemployment in newfoundland and labrator: special program for fishers adjusted the size of catch to be able to qualify for benefits, employment in fishing alternated in family to maximise number for benefits, government developped program to move people off welfare into UI (was seen as more prestigious than working on a government plan)
2. large amount of UI claims went to individuals with a significant previous claims history (scarring or habituation to program rules)
3. during recession in canada (1981-1983), individuals who had claim UI before were more likely to clim it during the recession (habituation or scarring)
4. employment durations coincided with average provingcial requirement to qualify for UI
5. job termination for seasonal workers tended to cluster when benefits fill out 52 weeks

Question 6

Describe the effect of variable entry requirements in Maine and New Brunswick. (further evidence of difference between UI of canada and USA)

Answer 6

1. Maine +NB have similar economies: forestty, fishing, agriculture and tourism
2. 1940: Maine establishe UI providing 16 weeks of benefits. The canadian UI system was only created in 1942: excluded seasonal workers and less generous than maine
3. NB: seasonal worker benefits were introduced, benefit amounts became more generous => became more generous than maine
4. 1940: part year work fell in Maine but rose in NB