Job Turnover and Labor Market Adjustment in Ontario from 1978 to 1993

Abstract

This paper documents job turnover and labor market adjustment activities in the Ontario economy from 1978 to 1993. The following highlights the major findings. Both the permanent layoff rate and the total permanent separation rate vary substantially from one industry to another. In 1992, the permanent layoff and total permanent separation rates ranged from 27.3% and 34.2% in construction to only 1.4% and 9.3% in public services, respectively. The permanent layoff rate and the total permanent separation rate also differ noticeably by gender, age and firm size--in most industries, the rates are higher among male workers than among females, higher among younger workers, and higher among smaller employers. While the permanent layoff rate increases during business cycle downturns and decreases during business cycle upswings, the reverse trend is observed with the total permanent separation rate. This is because the quit rate and the other permanent separation rate both decline during downturns and rise during upswings, more than offsetting the opposite trend associated with the permanent layoff rate. These univariate-tabulation findings are confirmed in the multivariate logistic regression results on the statistical determinants of permanent layoffs and total permanent separations--in most industries, after controlling for gender, age, firm size and time periods, the estimated likelihood of permanent layoffs is lower among female workers, decreases significantly with age and firm size, increases during recessions and decreases during recovery and expansion in most industries. The patterns of estimated incidence of total permanent separations are very similar to those of permanent layoffs except that total permanent separations decline during business cycle downturns and climb during business cycle upswings.

Permanently separated workers have had a much more difficult time in finding employment during the most recent recession than any other time in the past 15 years. Almost 40% of those who lost or left a job in 1989 did not have a job in 1993. This is in marked contrast with the experience of the early 1980s, when 29% of permanently separated workers were jobless 3 years after the separation. A very similar trend is found when the analysis is applied to labor market transitions among permanently laid-off workers. There is a great deal of out-of-province migration among permanently separated workers who did find a job. Nearly 45% of those who lost or left a job in 1989 and found a job in 1993 were employed outside of Ontario. An identical proportion of permanently laid-off workers is found to be employed in other provinces. There is tremendous inter-industrial mobility among permanently separated workers who found employment in Ontario. Less than 44% of those separated from a job in 1989 and found employment in 1993 in Ontario have remained in the same industry. Inter-industrial mobility is even greater among permanently separated workers in 1989 who did find employment in 1993 in other provinces--only 38% stayed in the same industry. Very similar inter-industrial mobility patterns are observed among permanently laid-off workers who found a job in Ontario as well as outside of Ontario.

JEL Classification: J63, J64