Throughout the late 1980s unemployment rates remained 2-3 percentage
points higher in Canada than the U.S. We use individual microdata from the
U.S. Current Population Survey and the Canadian Survey of Consumer Finances
to study the emerging unemployment gap between the two countries. For
women, we find that the relative rise in Canadian unemployment occurred
with relative increases in per capita weeks of work. The unemployment gap
for Canadian women was driven by a rise in the probability that nonworkers
are classified as "unemployed" as opposed to "out of the labor force". For
men, the increase in unemployment was accompanied by a relative decrease in
Canadian employment rates, and an increase in the probability that men with
no weeks of work are classified as "in the labor force". A comparison of
annual work patterns and income recipiency in the two countries suggests
that Canadians of both sexes have increasingly adjusted their labor supply
to the parameters of the Canadian Unemployment Insurance system.