Date of Award


Degree Type


Degree Name

Doctor of Philosophy


This thesis comprises five chapters which are all concerned with the general theme of sectoral shocks and unemployment duration. The first chapter motivates the issues addressed in the thesis by establishing their relevance and originality. The chapter begins by showing that the interaction between sectoral shocks and unemployment duration has largely been ignored in the sectoral shocks debate. The importance of unemployment duration at the theoretical level is demonstrated and data are presented to establish the empirical relevance of the theory.;The second chapter constructs and analyses a two-sector model of labour market search in which unemployment duration is an endogenous variable. Structure is imposed on the search process by adopting the "matching function" framework. Probabilities of exiting unemployment are related to variation in the arrival rate of job offers rather than just the offer rejection rate. The third chapter tests this relationship between labour market tightness and the transition probability into employment using monthly data for three Canadian provinces. Testing methods use flexible spline regression and isotonic regression methods to avoid the imposition of extraneous restrictions. General concordance between theoretical assumptions and empirical facts is found, and non-linearity in the estimated relationship is evidence against a simple queuing model.;In the fourth chapter, a stochastic version of the model of chapter two is developed and applied to divergent patterns of unemployment durations in Alberta and Ontario. An objective test of the pertinence of the model is conducted using a Markov switching-regression estimation method. The estimation method recovers parameters of a recruitment intensity function, Markov transition probabilities, and probabilities over states. The results support the hypothesis that sectoral shocks have affected unemployment durations.;The subject of the final chapter is the behaviour of the unemployment rate following the 1982 recession. Two stylized facts are examined: the greater persistence in Canada relative to the United States and in Alberta relative to Ontario. The contributions of unemployment insurance policy and sectoral shocks to these patterns is evaluated and some support for the sectoral shocks explanation is obtained.



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