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This paper explores the relationship between federalism and the policy design of labour market policies in two liberal welfare state regimes – Canada and the United States – addressing the following research question: How do variations in policy design intersect with federalism in both countries and how can these variations provide powerful, self-reinforcing or self-undermining feedback effects over time? Combining the literatures on the varieties of federalism, the liberal welfare regime, and policy design and feedback, the paper shows that paying close attention to federalism is necessary to understand diverse national policy designs that produce self-reinforcing feedback effects over time. [ABSTRACT FROM AUTHOR]