US-CANADIAN UNEMPLOYMENT RATE AND WAGE DIFFERENCES AMONG YOUNG, LOW-SKILLED MALES IN THE 1980S

During the mid 1980s young, low-skilled adults in Canada were much mor e likely to be out of work than their U.S. counterparts. The unemploym ent rate gap for this cohort was 7 percentage points. At the same time wage inequality was higher in the United States. Using panel data fro m the U.S. National Longitudinal Survey of Youth and the Canadian Labo ur Market Activity Survey, in this study a general equilibrium search model of the labour market is employed to identify structural differen ces contributing to these gaps. The results reveal that both wage and unemployment differences are driven by a higher job destruction/separa tion rate in Canada and higher job offer arrival rates in the United S tates. In general, the model characterizes the U.S. labour market as h aving less search frictions than that of Canada. That is, Canadian fir ms are found to have more monopsony power than their U.S. counterparts .