Labor Market and Natural Rate of Unemployment in US and Canadian Time Series Analysis
37 Pages Posted: 14 Nov 2011
Date Written: November 13, 2011
Canadian labor market data are being used in this paper. These series are quarterly data from 1980 Q1 to 2000 Q4. This series are stationary by test for cointegration I(0), meaning that there exist equilibrium relationship between the time series labour productivity (prod), employment (e), unemployment rate (U), real wages (rw).This notion was definitively confirmed with VEC model. VEC model shows long run coefficient, and if the system is in disequilibrium , alteration of the variables will only be -0.003 for real wages or -0.3%, -0.001 for unemployment or -0.1%, -0.000 for productivity or -0%,and -0% for employment. This means that Canadian labour market is in equilibrium working at natural rate of unemployment and by equilibrium wages.
Keywords: employment, real wages, labour productivity, VAR, VECM
JEL Classification: J40
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