Can a Matching Model Explain the Long-Run Increase in Canada's Unemployment Rate?

49 Pages Posted: 21 Nov 2012

See all articles by Andreas Hornstein

Andreas Hornstein

Federal Reserve Bank of Richmond

Mingwei Yuan

Bank of Canada - Department of Monetary and Financial Analysis

Multiple version iconThere are 2 versions of this paper

Date Written: January 28, 1998

Abstract

We construct a simple general equilibrium model of unemployment and calibrate it to the Canadian economy. Job creation and destruction are endogenous. In this model, we consider several potential factors which could contribute to the long-run increase in the Canadian unemployment rate: a more generous unemployment insurance system, higher layoff costs, higher distortionary taxes, and a slower rate of productivity growth. We find that in the model economy the impact of all of these factors on the unemployment rate is small.

Suggested Citation

Hornstein, Andreas and Yuan, Mingwei, Can a Matching Model Explain the Long-Run Increase in Canada's Unemployment Rate? (January 28, 1998). FRB Richmond Working Paper No. 98-2. Available at SSRN: https://ssrn.com/abstract=2123680 or http://dx.doi.org/10.2139/ssrn.2123680

Andreas Hornstein (Contact Author)

Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States
804-697-8266 (Phone)
804-697-8255 (Fax)

Mingwei Yuan

Bank of Canada - Department of Monetary and Financial Analysis ( email )

234 Wellington St.
Ottawa, Ontario K1A 0G9
Canada

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