TORONTO, Dec. 13 /CNW/ - Chronic rigidity afflicts labour markets in the
East, and both the cause and the potential solution lie in changes to the
Employment Insurance Program, according to a study released today by the C.D.
Howe Institute. In the study, "Chronic Rigidity: The East's Labour Market
Problem and How to Fix It," Yvan Guillemette, Senior Policy Analyst, finds
that Canadian labour market flexibility is unequal across regions, with the
West relatively flexible and the East inflexible and showing persistent
pockets of high unemployment. Unemployed workers in the East tend to stay put
rather than move to where the jobs are, thus preventing Canada from achieving
its full economic potential.
The study updates earlier research by Guillemette showing a rising
dispersion of regional unemployment rates around the national rate over the
past 15 years. Market flexibility is lower in the East, he writes, because
migration is hindered by a dwindling pool of young, educated and mobile
workers, as well as by more generous and easily accessed unemployment
benefits. The EI program hinders labour market fluidity by tying eligibility
and generosity to local unemployment rates. Regionally neutral rules would
reduce this labour market distortion and help to promote a stronger Canadian
labour market and a stronger economy overall.
This e-brief is available at: http://www.cdhowe.org/pdf/ebrief_51.pdf.
For further information:
For further information: Yvan Guillemette, Senior Policy Analyst or Finn
Poschmann, Director of Research, C.D. Howe Institute, (416) 865-1904,