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This paper examines the endogeneity of several structural variables which enter unemployment rate equations—the generosity of unemployment benefits, nonwage labor costs, the relative minimum wage, and the degree of unionization. It finds evidence of reverse causality for these structural variables based on causality tests. The structural unemployment rate equation is then estimated using instruments suggested by the empirical analysis of the structural variables. The paper confirms the earlier finding that the generosity of unemployment benefits, nonwage labor costs, and the relative minimum wage have a significant positive impact on the unemployment rate, but fails to find an effect for the degree of unionization.

Aggregate Human Capital --- Aggregate Labor Productivity --- Employment --- Income economics --- Intergenerational Income Distribution --- Labor costs --- Labor unions --- Labor --- Labor-Management Relations, Trade Unions, and Collective Bargaining: General --- Labour --- Minimum wage --- Minimum wages --- Nonwage Labor Costs and Benefits --- Plant Closings --- Policy Coordination --- Policy Designs and Consistency --- Policy Objectives --- Private Pensions --- Severance Pay --- Trade unions --- Unemployment Insurance --- Unemployment rate --- Unemployment --- Unemployment: Models, Duration, Incidence, and Job Search --- Wages --- Wages, Compensation, and Labor Costs: General --- Wages, Compensation, and Labor Costs: Public Policy --- Canada