A model of unemployment duration is estimated with weekly micro
data on a sample of Canadian men during the 1975 through 1980 period.
Entitlement provisions in the unemployment insurance program and demand
conditions are found to have a significant impact on the probability of
leaving unemployment. The probability of a worker leaving unemployment
declines with duration of unemployment, holding unemployment insurance
entitlement constant. When entitlement is allowed to vary, the probability of leaving first falls and then generally rises with unemployment
duration as the declining entitlement induces a greater willingness to
accept offers or search more intensively. These results are robust to
alternative specifications of duration dependence and to allowing for
person—specific unobserved heterogeneity.

This paper presents a method for assessing the impact of external,
national, and sectoral shocks on Canadian employment fluctuations at the
national, industry, and provincial levels. Special attention is given to the
contribution of sectoral shocks to aggregate employment fluctuations. Shocks
which initially affect specific industries and provinces can induce aggregate
fluctuations not only because national employment is the sum of employment in
various sectors but also because of feedback across sectors.
The analysis is based on an econometric model relating employment growth in
each province and industry to the current and lagged change in U.S. output, the
lags of employment growth at the national, industry, and provincial levels, a
Canadian national shock, and shocks affecting specific industries, specific pro-
vinces, and specific province—industry pairs. The model is estimated using
annual data on Canadian employment at the province-industry level.
The results suggest that U.S. shocks are responsible for two-thirds of the
steady—state variance in the growth of Canadian national employment, while the
Canadian national shock accounts for approximately one quarter of this variance.
Taken together, industry specific, province specific and province—industry spe-
cific shocks account for about one—tenth of the variance of Canadian national
employment growth. Although U.S. shocks are the dominant influence on aggregate
employment growth in Canada, sectoral shocks account for about thirty percent of
the variance in national employment due to Canadian sources.
Estimates of the contribution of U.S., Canadian national, industry, and
provincial shocks to the variance of employment in specific industries and pro-
vinces are also provided.

Using data on adult male workers we first investigate the
incremental effect of a year of schooling on unemployed hours,
and use this calculation to explain the difference in the pro-
portional effects of schooling on earnings and wages. Schooling
apparently reduces unemployed hours by reducing the incidence of
unemployment spells, but it does not significantly affect their
duration. We next test whether unemployed hours represent
real constraints on worker behavior. To do this we develop
and estimate life—cycle models of labor supply for workers with
and without spells of unemployment using longitudinal data. The
results imply that perhaps three-quarters of the unemployed hours
of male workers are part of the offer to sell labor.

The purpose of this paper is to summarize a certain line of work on
the interpretation of unemployment in the analysis of male labour supply
behavior. Specifically, this work investigates whether the data support
the null hypothesis that individuals experiencing unemployment are on a
labour supply function, and if the data do not support this hypothesis,
how might a researcher proceed in empirical work. The motivation for
doing this is two fold. First, what unemployment represents is an
intrinsically interesting question, and may have implications beyond
labour supply analysis in terms of macroeconomic theory. Second, if
unemployed workers are constrained in the sense that they are off their
individual labour supply functions, standard labour supply estimation
may involve a fundamental misspecification of the equation. However, it
should be emphasized that the purpose of this paper is to survey one
possible approach to this problem; the paper does not attempt to provide
a general survey on labour supply estimation or on constraints in the
labour market.

This study proposes and implements a specification test for the
hypothesis that unemployment represents intertemporal labour supply
behavior. The test allows for uncertainty and endogenous unemployment.
Given standard specifications of the intertemporal labour supply model, I
find strong evidence against this interpretation of unemployment. These
results indicate the need to turn to either 1) alternative models where
unemployed workers are off a supply function or ii) more complex models
of intertemporal substitution.