THE UNEMPLOYMENT GAP - RESULTS, NEW QUESTIONS, AND POLICY IMPLICATIONS

The unemployment rate gap between Canada and the United States poses n ot one puzzle but two: why the gap arose in the 1980s, and then why it persisted and grew in the 1990s? With respect to the 1980s, the evide nce marshalled by Riddell and others showed that employment grew at si milar rates in Canada and the United States, while labour force partic ipation grew much faster in Canada. The unemployment insurance system was given a key role in explaining this difference. In the 1990s, the unemployment insurance systems have become more similar, and the Canad ian participation rate has fallen. But the unemployment gap has grown rather than shrunk, requiring a new set of explanations. Cyclical diff erences have a role to play here, but are not likely to be large Enoug h to do the trick. The growing difference in unionization rates may al so have a role to play. The 1990s gap remains a puzzle.