Permanent Layoffs in Canada: Overview and Longitudinal Analysis

Statistics Canada Analytical Studies Branch Research Paper No. 103

35 Pages Posted: 25 Mar 1998

See all articles by Garnett Picot

Garnett Picot

Statistics Canada

Zhengxi Lin

Statistics Canada

Wendy Pyper

Statistics Canada

Date Written: 1997

Abstract

Canadians are increasingly concerned about permanent layoffs, as many feel job instability and the possibility of job loss has increased in the 1990s. Governments, confronted with a large number of permanent layoffs each year, need to know how to respond to improve labor adjustment and the possibility of quickly finding a new job for displaced workers. Within this context, this paper uses a new longitudinal data source on the separations of workers to address three issues. First, has there in fact been an increase in the permanent layoff rate in Canada in the 1990s, as one might anticipate given concerns about rising job instability? Second, what are the underlying causes of most permanent layoffs? The paper explicitly examines the role played by cyclical variation in aggregate demand, variation in industrial demand which is often associated with structural change, and differences in layoff rates by firm size which is in turn associated with the birth and death process of firms.

Third, with this as background, the core of the paper asks a question of concern to policy analysts: are most permanent layoffs rare events for workers, or are they a continuation of a pattern of repeat layoffs? This is important because a worker who is confronted with a layoff which is a rare event will require very different post-displacement adjustment assistance from someone whose history of employment has been marked with frequent layoffs, suggesting an inability to hold a job or demand-side instability in the firm or industry in which the person has worked. The workers? employment history over 10 years is used to explore the relationship between permanent layoff history and the probability of being laid off. Displaced workers are classified ?low-risk,? ?medium-risk? and ?high-risk? based on their layoff history, and multinomial logistic analysis is used to distinguish worker and firm characteristics associated with repeat layoffs or layoffs as rare events.

JEL Classification: J23, J63, J64

Suggested Citation

Picot, Garnett and Lin, Zhengxi and Pyper, Wendy, Permanent Layoffs in Canada: Overview and Longitudinal Analysis (1997). Statistics Canada Analytical Studies Branch Research Paper No. 103, Available at SSRN: https://ssrn.com/abstract=68979 or http://dx.doi.org/10.2139/ssrn.68979

Garnett Picot (Contact Author)

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-8214 (Phone)
613-951-5403 (Fax)

Zhengxi Lin

Statistics Canada ( email )

Ottawa, Ontario
Canada
613-951-0830 (Phone)
613-951-5403 (Fax)

Wendy Pyper

Statistics Canada

Ottawa, Ontario
Canada
613-951-0381 (Phone)
613-951-5403 (Fax)

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