Focus on Real Wage Unemployment

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One of the major economic developments in Canada during the 1980s has been the emergence of a significantly higher unemployment rate in Canada than in the United States. By the end of 1985 the rate in the United States had dropped to a bit over 7 percent, almost identical to the rate at the peak of the previous business cycle expansion in mid-1981. In Canada, on the other hand, the rate was about 10 percent, well above the 7 percent in the first half of 1981. This difference in the unemployment rate was the greatest divergence since the labour force survey was initiated four decades ago.

The purpose of this study is to analyze the factual evidence on economic growth since 1973, the 1981-82 recession, and high unemployment in Canada compared to the United States, compared with the longer-term experience in both countries.

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