Appendix B: Conceptual Aspects of the Information Used in this Study

Sources of Information

The information used in this report was taken from employment surveys done in each of the three countries: the Labour Force Survey (LFS) in Canada; the Current Population Survey (CPS) in the United States; and the Encuesta Nacional de Población (ENE, National Employment Survey) in Mexico.

The Canadian LFS was begun in 1945 and since 1952 has been carried out on a monthly basis. With the aim of improving the efficiency of this survey, the LFS sample is revised every 10 years based on the results of recent census data. The last revision was made in 1990. In 1996, the LFS questionnaire was modified to gather further information on underemployment and the marginal labor force. The complete implementation of the new questionnaire was achieved in January 1997. The principal modifications included: a) changes in the definition of full-time and part-time employment, moving to a definition based on hours worked by an individual only in his or her main job;¹ b) a restriction of information regarding unemployed workers to those who had worked during the previous 12 months, where formerly information was gathered for those who had worked during the previous five years;² c) a similar restriction of information gathered on the reason for leaving the last job, to those people who had worked in the previous 12 months.³

The United States CPS has been modified several times since it was initiated in 1940, with the aim of improving the quality of information. The most recent changes were made in 1994. The changes included population controls based on the 1990 Census and redesign of the questionnaire. The redesign of the questionnaire had the objectives of measuring concepts more precisely and implementing several definitional changes. This modification brought about a break in the continuity of the series, as a result of which data gathered from 1994 onwards is not strictly comparable with that of earlier years. The most relevant results of these changes with regard to employment growth were: an increase in the number of people reporting some labor force activity and an increase in the unemployment rate, a sharp reduction in the number of persons classified as discouraged workers and a reduction in the number of workers classified as working part time for economic reasons.⁴

The Mexican ENE was carried out for the first time in 1988 and has been performed on an annual basis since 1995. Since the ENE has not undergone any substantial changes, its data are comparable. In 1993, the definition of self-employed and employer for workers in the agriculture sector was changed: workers who occasionally employed temporary workers were moved from the category of employers to the category of self-employed workers. To account for the change, the data for 1991 were adjusted to make them comparable with later years. In 1995, the sample size for rural areas (towns with less than 100,000 inhabitants) was changed from 5,073 homes to 7,244 homes.

Conceptual Differences

The definitions of employment and unemployment are among the most important conceptual differences among the three countries’ employment surveys. In Mexico, people waiting to start a new job within the next four weeks or those people on layoff⁵ are considered employed. In Canada and the United States such individuals are considered unemployed. Since 1994 in the United States, those workers waiting to begin a new job must have looked for work within the last four weeks in order to be considered unemployed. Otherwise they are classified as not in the labor force. In the United States, people on layoff are considered unemployed if they have an indication that they will be recalled within the next six months or have been given a date to return. In Canada these people do not need a specific date to return to work to be classified as unemployed.

In Mexico and Canada, unpaid workers who have worked at least an hour during the reference period are considered as employed, while in the United States, such workers must work at least 15 hours in order to be considered employed. If not, they are considered out of the labor force. The lower age limit for consideration as part of the labor force varies in the three countries. In the United States, this limit stands at 16; in Canada it is 15, and in Mexico, 12. As a means of making information supplied by each country more comparable and unless otherwise indicated, the information provided for Mexico in this report refers only to those age 15 or over, unless otherwise indicated.

Mexican data refers to the second trimester of each year, while in Canada and the United States data are based on an annual average.

Another important difference is the definition of self-employed workers, wage and salaried workers and employers. In the United States and Canada, self-employed are those who work for profit in their own businesses. Only unincorporated self-employed are included in the self-employed category. The incorporated self-employed are included in the wage and salaried category.⁶ In Mexico, the definition of wage and salaried workers does not include incorporated self-employed workers. Consequently, the number of wage and salaried workers in Canada and the United States may be overstated when compared to Mexican data. On the other hand, in Mexico the employer category refers to those persons who hire paid employees; while in Canada and the United States this category is included as self-employed workers.

The definition of involuntary part-time work also varies from one country to another. In Canada and in the United States, involuntary part-time workers are part-time because of economic reasons. They must want and be able to work full-time in the reference week. (In Canada and the United States, this requirement was included in the latest revision of the questionnaire.) In the case of Mexico the availability for work full-time is not specified in the questionnaire. In Canada, part-time work is defined as usually working less than 30 hours a week. In the United States, it refers to usually working less than 35 hours a week. In Mexico, it refers to working less than 35 hours per week. In Canada and Mexico, information about hours worked refers to the main job, while in the United States it aggregates all jobs, which implies an underestimation of part-time work in that country.

There are also differences in the definition of discouraged workers used by the countries. In the United States, to be qualified as discouraged, workers must have engaged in some job search within the past year, but not in the previous four weeks and must be currently available to take a job. In Canada, the concept refers to those people who did not engage in a job search because they felt no suitable work was available, but were ready and willing to work in the reference week. In Mexico, discouraged workers are those who did not look for a job within the last four weeks because they felt no suitable work was available; they need not be able to take the job.

Finally, the concept of earnings used in the report also presents differences among the three countries. In Canada, the concept refers to average annual earnings of full-year, full-time workers.⁷ It includes wage and salaried workers and self-employed workers. In the United States, the information refers to the median weekly earnings of full-time wage and salaried workers. In Mexico, the data refers to the average monthly earnings of full-time and part-time workers. It includes wage and salaried workers and self-employed workers.

Endnotes

¹ The new definition increased the part-time employment rate from 10.9 percent in 1996 to 12.5 percent in 1997.

² This change served to reduce the unemployment rate and the size of the workforce for certain industries and occupations. The overall estimates of the unemployment rate and the labor force estimate were not affected by these changes.

³ The overall estimates of unemployment and labor force non-participation are not affected by this change. For more information about the changes in the Labour Force Survey in Canada see: Debora Sunter, Mark Kinack, Ernest Akyeampong and Dan Charrette, The Labour Force Survey: Development of a New Questionnaire for 1997, Households Surveys Division, Statistics Canada, 1997.

⁴ For more detail information, see “Revisions in Current Population Survey, Effective January 1994,” in Issues in Employment and Earnings, February 1994.

⁵ People laid off for economic reasons who are expecting to be recalled are considered unemployed if they looked for a job within the preceding two months.

⁶ The term incorporated is used for those businesses legally constituted as corporations.

⁷Full-year is defined as 49 to 52 weeks worked.