Short-term employment transitions of the Canadian labour force: rural-urban differences in underemployment

Using data from the Canadian Survey of Labour and Income Dynamics (SLID) for the period 1993–1996, we examine patterns and determinants of labour‐force transitions of adequately employed and underemployed workers in an attempt to explore whether employment dynamics significantly differ between rural and urban workers so as to disadvantage rural economic performance. The results indicate that rural adequately employed workers are significantly more likely to enter underemployment but once they are underemployed, they also have a higher probability of re‐entering adequate employment. Further, we also found weak evidence that the education level of workers has a lower impact on the probability of moving out of underemployment in rural than in urban areas. In addition, rural women are significantly less likely than their male counterparts and urban workers to enter adequate employment, although the presence of young children does not seem to especially constrain the employment of rural women. The results suggest that labour‐force transition in and out of adequate employment, and particularly underemployment, significantly differ between rural and urban workers and should be taken into account when evaluating employment hardship in rural Canada.