A Study Attempts to Investigate the Role of the Various

question 44

Essay

A study attempts to investigate the role of the various determinants of regional Canadian unemployment rates in order to get a better picture of Canadian aggregate unemployment rate behavior. The annual data (1967-1991)is for five regions (Atlantic region, Quebec, Ontario, Prairies, and British Columbia), and four age-gender groups (female and male, adult and young). Focusing on young females, the authors find significant effects for the following variables: the regional relative minimum wage rate (minimum wages divided by average hourly earnings), the regional share of youth in the labor force, the regional share of adult females in the labor force, United States activity shocks (deviations of United States GDP from trend), an indicator of the degree of monetary tightness in Canada, regional union density, and a regional index of unemployment insurance generosity. Explain why the authors only used region fixed effects. How would their specification have to change if they also employed time fixed effects?

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Definitions:

Insourcing

The practice of performing a business function internally rather than outsourcing it to an external provider or company.

Reverse Outsourcing

The practice where jobs or tasks are brought back in-house from an external service provider, often to regain control or reduce costs.

Nearshoring

The practice of transferring a business operation to a nearby country, often to reduce costs and improve collaboration due to geographical proximity.

Onshoring

The process of returning a business's production or services to its home country from overseas to benefit from domestic advantages.