McGill University, Department of Sociology
Funding Opportunity for MA and PhD Students
Research Project: Incentives, Labour Market Policies and Flexibility: A Study of the
Determinants of Labour Market Transitions
Axel van den Berg, Sociology
Anthony C. Masi, Sociology
Daniel Parent, Economics
This project will fund at least one MA and one PhD student as research assistants/collaborators for
the duration of the project (2003-2006). Students interested in doing graduate work that is in some
way related to the research described below should indicate this in their application to the graduate
program and get in touch with Prof. Axel van den Berg at axel.vandenberg@mcgill.ca.
Project Description:
This project addresses a fundamental issue in the debates about the desirability of labour market
deregulation. There is a long-standing consensus among academics and policy makers of all stripes
that increased labour market flexibility, involving higher rates of mobility between jobs,
occupations, training, different labour market statuses, and so on, has become crucial for the
success of a modern economy. But there is fundamental disagreement on how best to promote such
flexibility. The advocates of the ‘Anglo-Saxon’ model of labour market deregulation argue that
only the removal of all impediments to the unfettered operation of market signals can provide the
proper mix of clear incentives to stimulate workers to accept the requisite transitions more readily.
Proponents of the European ‘Social Model’ by contrast recommend a more interventionist and
supposedly gentler and more inclusive policy regime that encourages workers to adjust to changes
in the economy and labour market by means of judicious programs of earnings, training and
placement support. The basic issue that divides these two camps concerns what motivates workers
to accept change: is it ultimately only market signals such as earnings differentials and job
availability or can these to some extent be replaced by ‘active’ labour market policies that reduce
the reliance on earnings inequality and the threat of unemployment? This project seeks to address
that question by exploiting the changing labour market policy environment in recent years in
Canada combined with the existence of a large pool of quantitative data on labour market
transitions collected by Statistics Canada covering the same period.
Over the past decade and a half, the Canadian federal and provincial governments have
implemented a whole series of reforms of their labour market policies, including (un-)employment
insurance, social assistance, training programs, and so on. While much of the rhetoric supporting
the policy reforms emphasizes their supposedly more ‘active’ nature, critics claim that many of
them have effectively done little more than imitate US-style deregulation. In addition, provincial
governments have to some extent followed divergent policy directions over this period, some
energetically deregulating (Alberta, Ontario), while others have implemented more interventionist
policies (Quebec, British Columbia). Statistics Canada has been collecting data on jobs, earnings,
and labour market transitions in a series of massive surveys starting in the early 1980s. Taken
together, these surveys offer extraordinarily rich data on a range of possible determinants of labour
market transitions, including earnings changes, training spells, permanent or temporary exit and
entry into the labour force, and so on. Some of the surveys are panels which immeasurably
increases their value for the study of possible determinants of labour market transitions.
The co-existence this history of policy reform and the data sets collected by Statistics
Canada provides a unique opportunity to address the above research question by studying the
effects of specific policy changes and policy differences on patterns of labour market mobility.
This project will collect an inventory of the major reforms in policies affecting the labour market
at the federal and provincial levels from the mid-1980s on. This will then be used to identify
specific episodes and differences in policy regimes which would be expected to affect labour
market mobility patterns and their determinants. We will then examine the various labour market
and earnings surveys for the period to determine what effects these policy reforms have actually
had on the labour market transition patterns. Finally, in order to control for effects due to
(changing) recruitment strategies we will interview representatives of about 50 firms across the
country selected according to their impact in recent years on local labour markets.
By combining these three sources of information we expect to be able to address the
aforementioned fundamental question about the determinants of labour market transitions in a
much more systematic manner than has hitherto been the case. The research is also intended to
contribute to a larger EU-funded effort which hopefully will issue in a major joint cross-national
research effort covering some 15 countries.