Changing Labour Market Participation Since the Great Recession: A Regional Perspective

This paper discusses broad trends in labour force participation and part-time employment across different age groups since the Great Recession and uses provincial data to identify changes related to population aging, cyclical effects and other factors. The main population age groups examined are youth (aged 15-24), prime age (25-54) and older (55 and above). Six main findings are reported. First, aging has been the most important driver of reduced participation. On their own, aging effects would have depressed participation rates by more than they fell between 2007 and 2014, and have been partly offset by rising participation rates of older workers. Second, shifting age composition has had the largest impact on the Atlantic provinces, owing primarily to their shrinking prime-age populations as some workers have migrated west. Third, a considerable part of the overall participation rate decline since 2007 reflects a greater share of prime-age and youth populations that are out of the labour force for various reasons including school, illness, and family responsibilities. These changes appear to be driven by both structural and cyclical forces, although the relative importance of each is unclear. Fourth, effects associated with “discouraged workers” have been negligible. Fifth, youth participation rates have fallen the most, by 2.8 percentage points since 2007, with 9 per cent of the decline reflecting purely higher school enrolment rates. Sixth, weak business conditions appear to be the main driver behind the shift toward part-time employment since the Great Recession, with involuntary part-time work explaining almost the entire increase since 2007.