Abstract:
A major reason economists study business cycles is because more people
are unemployed
in recessions. Unemployment rises because more people lose their jobs
(separations) and
because jobs are harder to find. This paper decomposes unemployment
fluctuations to
quantify the relative contributions of job-finding and separations in
Canadian recessions. In contrast to recent research for the
U.S., such as Shimer (2005) and
Hall (2005), which
emphasizes almost exclusively the role of depressed job finding in the
last few recessions,
my results suggest separations play an important role in the Canadian
business cycle.
In addition, I find that recessionary job
losses are concentrated mainly
in durable goods
industries (construction and manufacturing). I am investigating whether
changes in the industrial composition can explain the movements of the aggregate job
finding and separation
rates, and whether sectoral change has contributed to the decline in
aggregate volatility.