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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.

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Project (M.P.P.) - Simon Fraser University, 2006. / Theses (Master of Public Policy Program) / Simon Fraser University. Also issued in digital format and available on the World Wide Web.

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In an effort to explore various difficulties in the process of reemployment, the focus of this study is how, to what extent, and in what way length of unemployment duration is generated by the interplay between the structural characteristics of the labor market and the individual characteristics of unemployed workers. The structural resources are conceptualized in terms of (1) different types of reemployment, and (2) economic sectors. It turns out that the insertion of labor market structures into research on unemployment duration is quite valuable in improving our understanding of individual reemployment behavior. / The findings show that reemployment through job recalls is relatively easier than through job switches. Even though many unemployed workers remained to benefit from the structural buffer of internal labor markets in their struggle for reemployment, workers losing core-sector jobs are found to have more difficulty in switching to a new job relative to those losing peripheral jobs. The finding illustrates a critical weakness of internal labor markets in reallocating unemployed workers. / Furthermore, the impact of the labor market location of lost jobs is also observed in both the manner and the extent to which the individual attributes of unemployed workers affect the process of reemployment. (1) More education substantially improves the reemployment chances of workers losing core-services jobs, but not workers unemployed from other sectors. (2) The reemployment probability of workers losing core-services jobs is increased with an improvement in general education whereas the reemployment probabilities of workers losing core goods-production jobs tend to increase with an accumulation in firm-specific skills. (3) Men tend to maintain their reemployment advantage through their access to internal labor markets whereas women improve their reemployment probability by benefiting from job expansion in service industries. (4) Experienced core-service workers tend to have a shorter unemployment duration than young ones when their jobs are available for recall, whereas experienced peripheral goods production workers often have a competitive disadvantage in switching to a new job. And (5) UI benefits slow down the job-recall rate substantially but have little impact on the individual behavior of searching for a new job. The problem of timing termination of unemployment duration to coincide with exhaustion of UI benefits is much more severe for the job-recall rate than for the job-switch rate.

The thesis examines the impact of a partial switch to a share system in Canada on unemployment and inflation. Simulations with an independent Canadian macro model and Canadian data for the period 1973-1983 show that profit sharing will not always resolve unemployment and inflation, as claimed by Martin Weitzman. Some combinations of the share parameters resolve them, while others aggravate them. Thus, the combinations of the share parameters play a key role in terms of impact of the profit sharing on unemployment and inflation.

The evolution of the Unemployment Insurance Programme since 1940 has led to the abandonment of the intended insurance nature of the programme. As a result, it can no longer be considered solely an income protection scheme. Rather, it has evolved into an income maintenance plan aimed at supplementing the income of seasonal workers in high unemployment regions. As a consequence, there has been an interprovincial transfer of unemployment insurance funds from low to high unemployment regions. The regional characteristics of the programme have also distorted the structure of labour markets in high unemployment regions by attracting workers in seasonal industries therefore maintaining unemployment rates high.

The findings of this thesis are somewhat at variance with the literature on Canadian public policy. The literature tends to accord primary importance in the federal policy-making process to forces such as political parties, bureaucratic groups, pressure groups, and the provinces. This study demonstrates that the political leadership of an individual cabinet minister and, subsequently, the political leadership of the government as a whole were of primary importance in the development of unemployment insurance policy in the 1970's. The policy interests of political leadership took precedence over those of other forces in the policy-making process. Moreover, the input of other forces with the exception of political parties, was negligible. Political leadership required the support of sympathizers within the major political parties to exercise leadership functions of surveillance and legitimation. / Bryce Mackasey, who introduced a new program in 1971, carried out these leadership functions so effectively that he became an agent of policy reform. Mackasey exercised surveillance over the policy-making activities of his public servants and legitimized the scheme to opponents within the major political parties, other bureaucratic groups, and the provinces. However, during the amending process, the government as a whole was not required to exercise surveillance but it successfully legitimized its policy interests to the same forces.