Testing the Flexibility Paradigm: Canadian Labor Market Performance in International Context

Abstract Like most of Europe, Canada experienced high levels of unemployment from the early 1980s through the late 1990s. It responded by introducing significant labor market reforms aimed at implementing OECD-style flexibility. In chapter 4, Jim Stanford points out that based on standard indicators of flexibility, like employment shifts across sectors, geographic mobility, and the levels of part-time work and self-employment, Canada gets high scores. He argues that the real objective of Canadian reforms has not been greater labor market flexibility per se, but greater labor market discipline through deregulation He finds that it is aggregate demand conditions, not labor market institutions, which best accounts for differences in labor market performance between the United States and Canada.