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Local Labor Markets in Canada and the United States

University of Illinois and National Bureau of Economic Research (NBER)Bank of CanadaSecurities and Exchange CommissionDalhousie University and NBER

We examine US and Canadian local labor markets from 1990 to 2011 using comparable household and business data. Wage levels and inequality rise with city population in both countries, albeit less in Canada. Neither country saw wage levels converge despite contrasting migration patterns from/to high-wage areas. Local labor demand shifts raise nominal wages similarly, although in Canada they attract immigrant and highly skilled workers more while raising housing costs less. Chinese import competition had a weaker negative impact on manufacturing employment in Canada. These results are consistent with Canada’s more redistributive transfer system and larger, more educated immigrant workforce.