The Bank of Canada says the country’s job-creation record since the recession is likely a little less impressive than the fall in the unemployment rate would suggest.
The central bank says in a new research paper that the unemployment rate, although the most quoted measure of labour market health, has overestimated the jobs recovery in Canada, and particularly in the U.S.
The paper, by economists Konrad Zmitrowicz and Mikael Khan, estimates Canada lost 430,000 jobs in the recession, with unemployment rising from 5.9 per cent in May 2007 to a peak of 8.7 per cent in October 2009.
It has since recovered those lost jobs and created 600,000 more, but “an unusually large share of the unemployed have
been out of work for six months or more, and many workers who would like to work full time have been able to obtain only part-time employment.”
Chosen excerpts by Job Market Monitor. Read the whole story at Jobs recovery overstated, Bank of Canada study finds – Business – CBC News.
The Paper Main Findings
- Labour market conditions are important for assessing economic well- being and are crucial for informing the conduct of monetary policy. This article uses several measures of labour market activity to provide a broad perspective on the performance of the labour market in Canada and the United States since the Great Recession of 2007–09.
- The article highlights the importance of considering a broad range of information in assessing the state of the labour market and also presents a simple way to summarize much of this information in a single composite labour market indicator (LMI) for both countries.
- The LMI suggests that the unemployment rate in Canada has evolved largely in line with overall labour market conditions since the recession, but may have modestly overstated the extent of recent improvement. This contrasts with the United States, where the unemployment rate appears to have significantly overstated the improvement in broader labour market conditions.
Beyond the unemployment Rate: A￼￼￼ssessing Canadian and U.S. labour markets since the Great Recession by ￼￼￼￼￼￼￼￼￼Konrad Zmitrowicz and Mikael Khan