Although the participation rate for the teen-
aged group was lower in Canada than in the
United States in the 1970s, it had caught up by the
beginning of the 1980s and overtaken the U.S. rate
by the end of the decade. The relatively stronger
expansion in Canada was a significant factor in
the latter occurrence. The drop in participation
rates in the 1990-91 recession, though significant
in both countries, was much more severe in Can-
ada and, while the rates began to recover some-
what in the United States after 1992, they contin-
ued to fall in Canada. Nevertheless, the U.S. rates
have not returned to their pre-recession levels,
suggesting structural factors may be playing a
role.
Chart 9 Summer participation rates, Canada
Note: Data not seasonally adjusted.
As the increase in full-time school attendance
in Canada can account for only a small part of the
decline in the participation rate, most of the de-
cline stemmed from falling participation rates for
students and non-students. The participation rate
for teenage students in Canada fell about 12 per-
centage points between 1989 and 1997, reflecting
a particularly difficult job market for these young
people, one that was much more severe for both
students and non-students than for older youths
(Statistics Canada, 1997). The performance of
teen participation rates in the summer months en-
forces this view (Chart 9). In addition to the weak-
ness of the economy, Canadian students may also
have been affected by the restructuring in sectors
that traditionally provided the kind of part-time or
summer jobs filled by teenagers, such as retail,
which accounts for about 25 per cent of student
employment.
Chart 10 Participation and employment rates, 20-24 age
group
Canadian teenagers who are not in school have
also had difficulty finding jobs in the 1990s.25
Their participation rate fell by almost seven per-
centage points during the recession, and by 1997
it had recovered by only two percentage points.
Apart from the cyclical effect, the shrinking per-
centage of jobs that now require more than a basic
level of literacy may have negatively affected the
search intensity of both United States and Cana-
dian teens.26 The increases in payroll taxes, in-
cluding the extension of EI premiums to all hours
worked, may also have discouraged job search
among Canadian teens. The rise in the minimum
wage in Canada relative to the average wage in
the 1990s, in contrast to its decline from the mid-
1970s until the mid-1980s, may have had a nega-
tive effect on the demand side of the labour mar-
ket, which in turn dampened the supply side. The
Canadian participation rate Canadian employment rate
= U.S. participation rate = U.S. employment rate
Summer 1999
Canadian Business Economics