It is generally accepted that during a recession the official labour market data reported by Statistics Canada understates the "true" extent of unemployment for the following reasons:
1)Workers who leave the labour force and return to school are counted as full-time workers;
2)Some workers become discouraged and leave the labour force;
3)Some workers are underemployed.

Question

Quizplus · Accepted Answer

During a recession, workers may be forced to accept part-time work or work below their skill level, creating underemployment (3). Some workers may become discouraged and stop actively searching for work, reducing the labour force participation rate, and therefore the unemployment rate will be understated (2). Additionally, if workers leave the labour force voluntarily to go back to school, they are still counted as employed, leading to understatement of the true extent of unemployment (1). Therefore, the labour market data reported by Statistics Canada understates the true extent of unemployment during a recession, because of 2 and 3.

It Is Generally Accepted That During a Recession the Official