Regional Disparities in Wage and Unemployment Rates in Canada: A Review of Some Issues

In this report the author considers three issues relating to regional disparities in Canada. First, the size of regional disparities in unemployment and wage rates is examined together with the patterns in these disparities over time. Next, various theories related to the causes of regional disparities are reviewed, focussing on their predictions regarding regional disparities in unemployment and wage rates. Finally, the author considers the consequences that regional disparities may have at the aggregate level as the result of aggregation bias. The implications of disparities in unemployment rates for aggregate wage inflation are examined, using the Phillips curve framework.