Arnold Kling  

Canadian Recalculation?

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Mike Moffatt wants to know if I see Stephen Gordon's analysis as supporting the Recalculation Story for Canada. Gordon writes,


the manufacturing sector is where most of the damage occurred. Even though it employed fewer than one worker in eight when the recession hit, it accounts for almost two-thirds of the jobs that have been lost. And if we restrict attention to manufacturing jobs in Ontario, the story is even more startling: a sector that employed 5.3% of Canadian workers has absorbed more than 36% of the total losses.

He suggests that the recession merely accelerated what had been a downward trend in manufacturing employment.

As to whether or not this supports the Recalculation Story, my answer would be "wait and see." If it were cyclical unemployment as we used to think of it, then a lot of these manufacturing workers would be hired back. We would at least get back to the previous trend line. If the Recalculation Story is correct, then we will not see any symptoms of a cyclical recovery in manufacturing employment. New jobs, when they appear, will appear elsewhere.


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CATEGORIES: Macroeconomics




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