How to Embrace Change: Provincial Unemployment After the 2008 Recession

Five years after the 2008 recession, provincial unemployment rates in Canada remain higher than pre-recession levels. In some provinces, initial declines in unemployment have plateaued. When structural changes occur, a higher unemployment rate can persist even after a full economic recovery. This study undertakes an empirical analysis of provincial panel data to uncover potential causes of persistent unemployment across Canada. The results indicate that, after the recession, the structural component of unemployment increased in all provinces except for Saskatchewan. Several policy options are suggested to expedite the adjustment of effected workers and to prevent future structural unemployment.