Small Differences That Matter

This volume, the first in a new series by the National Bureau of Economic Research that compares labour markets in different countries, examines social and labour market policies in Canada and the United States during the 1980s. It shows that subtle differences in unemployment compensation, unionization, immigration policies, and income maintenance programmes have significantly affected economic outcomes in the two countries. Examples of these differences include the following: Canada's social safety net, more generous than the American one, produced markedly lower poverty rates in the 1980s. Canada saw a smaller increase in earnings inequality than the United States did, in part because of the strength of Canadian unions, which have twice the participation that US unions do. Canada's unemployment figures were much higher than those in the United States, not because the Canadian economy failed to create jobs but because a higher percentage of non-working time was reported as unemployment. These disparities have become noteworthy as policy makers cite the experiences of the other country to support or oppose particular initiatives.