Recent Developments in the Canada-US Unemployment Rate Gap: Changing Patterns in Unemployment Incidence and Duration

Abstract: Since the mid-1990s, the performance of the labour market in Canada has improved both in ab- solute terms and relative to the United States. In 1995, the unemployment rate in Canada averaged 9.6 percent, a full 4.2 percentage points above the US rate. Almost a decade later in 2004, the unemployment rate in Canada averaged 7.2 percent, compared to 5.5 percent in the United States, a gap of only 1.7 percentage points.' Other labour-market indicators also reflect this relative improvement. The employment-to-population ratio, for example, rose in Canada from 58.6 percent in 1995 to 62.7 percent in 2004, while in the United States this ratio fell marginally over the same period from 62.9 percent to 62.3