Does the Unemployment Invariance Hypothesis Hold for Canada?
10 Pages Posted: 6 Sep 2016 Last revised: 16 Apr 2023
Abstract
This article explores the long-run relationship between unemployment rate and labor force participation rate in Canada. The cointegration analysis vindicates the existence of a long-run relationship between these two variables. This finding leads us to doubt the pertinence of the unemployment invariance hypothesis for Canada. This is consistent with the empirical studies for Japan, Sweden and the United States, but contradicts the empirical studies for Australia, Romania and Turkey. There are contradictory studies for the United Kingdom.
Keywords: cointegration, Canada, unemployment, labor force participation, unemployment invariance hypothesis
JEL Classification: E24, J64, J21
Suggested Citation: Suggested Citation