The response of labour supply to demand in Canadian regions.

The response of labour supply to demand in Canadian regions. In Canada cyclical fluctuations in unemployment are more severe in some regions than in others. An explanation might be that in the regions where unemployment falls least in recession, the discouraged worker effect operates more strongly, leading to relatively heavy disguised unemployment in these regions. Regression analysis is used to examine whether this explanation is wholly or partially valid. It turns out not to be. On the contrary, additional worker effects appear, and in a pattern such that an adjustment to measured unemployment rates to allow for them would reveal even greater differences across regions in sensitivity to recessions than were previously thought to obtain. [ABSTRACT FROM AUTHOR]