Unemployment in Canada 2014 Free Essay Example, 1500 words

What starts out as a cyclical unemployment may grow into a structural unemployment if the economic recession persists for a long time. The occurrence of structural changes causes higher rates of unemployment. Both the provincial and federal governments share jurisdiction over the labour market policies in Canada. The rates of unemployment in Canada represent the loss of production to the Canadian economy (International Labour Organization, 2014). It results into increased demand for government services, substantial financial hardship and diminished physical and mental health of the unemployed citizens. Theory of unemployment in Canada Neo-classical theorists argue that local difference cannot persist in integrated economies such as Canada. The local inequality generates relative wage changes that trigger the labour market adjustments. The recent studies showed that specific determinants of the natural unemployment rate differ across localities. For instance, the western provinces experienced the reduction in structural unemployment in the mid 1990s while east and central provinces of Canada did not. These theorists also argue that the differences in labour market institutions play a role in determining the natural rate of unemployment. These disparities become conspicuous during economic down turns. We will write a custom essay sample on Unemployment in Canada 2014 or any topic specifically for you Only $17.96 $11.86/pageorder now The provincial rates of unemployment differ at any given time. In addition, different industrial structure and performance create varying adjustment speeds within each provincial labour market (Karpenko, 2008). This further influences the rates of unemployment. Model of unemployment in Canada The total rate of unemployment is equal to the natural and cyclical rates. The unemployment rate falls when there is growth of the economy. However, when unemployment rises, the economy is in a recession. The increase in the price of oils increases unemployment in the areas where oil is manufactured and produced. Besides increased energy prices, the persistence of oil prices alters the production processes leading to structural unemployment. In Canada, the impact of interest rate depends on whether capital is predominantly used as a substitute or complement to labour. When the interest rate rises, the demand for labour increases and the producers switch away from capital. This reduces unemployment. THE STUDY ANALYSIS The study analysis for the rates of unemployment in Canada The youth unemployment rate has historically been higher than that for adults. Recent years, marked by the 2008-2009 recessions and the subsequent recovery, have been no exception.