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This dissertation is an economic investigation into the persistency of Canadian unemployment. It examines whether this persistence is caused by sectoral shifts. Empirically, we test for persistence using the Cochrane Variance ratio and the modified rescaled range test statistics. We estimate unemployment persistence using Bayesian ARFIMA class of models. To understand employment sectoral dynamics, the thesis uses data-driven Vector Autoregression models with emphasis on Classical and Bayesian estimation techniques. At the theoretical level, two structural Real Business Cycle models are proposed to explain how aggregate unemployment persistence emerges from sectoral labour mobility. The main difference between these two models is the impetus of the shock. One model uses relative sectoral technology shocks and the other uses relative sectoral taste shocks. We show that sectoral phenomena are important in accounting for aggregate unemployment fluctuations.

This dissertation looks at three different aspects of labour mobility. The first essay examines the movements of workers between wage-employment and self-employment in the United States and the returns to various forms of experience in that context. The second essay studies the long-term unemployed in Canada, and the transitions that they make into other labour market states. The final essay deals with the implications of movements of workers between countries -- specifically, it analyzes earnings distributions to obtain a more complete picture about the declining economic fortunes of immigrants to Canada in recent times. / They key contribution of the first essay lies in the recognition that consideration must also be given to industry and occupation specific experience when studying returns to experience in the context of movements between wage and self-employment - otherwise the returns to other forms of experience will be biased. Using data from the U.S. National Longitudinal Survey of Youth, I find that past occupational experience can, among the different forms of experience, best explain the hourly rate of pay for workers, especially among the self-employed. / Using data from the Survey of Labour and Income Dynamics, the second essay examines the employment prospects of the long-term unemployed (defined as being unemployed for at least a year) in Canada, in view of what is known from the research literature in Europe. Canada has a relatively low rate of long-term unemployment when compared to most European countries, but the proportion of long-term unemployed who remain unemployed for another year or more is surprisingly close to the high European levels. Examination of the factors affecting the chances of the long-term unemployed to obtain regular employment reveals, however, that several of the factors that hinder the chances of the long-term unemployed in Europe are not major obstacles, including age, gender and immigrant status. Low skill, on the other hand, does appear to be a major contributor to very long-term unemployment in Canada as elsewhere. The findings appear to support the view of Canada as belonging firmly with the 'liberal' welfare state and labour market regimes. / The final essay studies earnings distributions of recent immigrants to Canada in 1980 and 2000, as well as those of their native-born counterparts; moreover, I make a distinction between individuals in wage work and in self-employment. Using Canadian Census data, the essay studies two aspects -- immigrant/native-born earnings gaps, and earnings inequality within the immigrant and native-born populations. With regard to the observed growth in earnings gaps, I find that changes in observed characteristics and earnings structure effects were both responsible. With regard to the observed growth in earnings inequality, I find that residual inequality was largely responsible. But while this increase in residual inequality appears to reflect the effects of comprehensive skill biased technical change among the wage-employed, this is not the case among the self-employed.

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