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I believe that total LFS employment is about 15% higher because it includes self-employment, whereas SEPH is only payroll employment.

Statistics Canada includes a section comparing LFS and SEPH near the bottom of its SEPH release.

I'm no expert, but the web link Erin helpfully provided implies the difference is because the same question is being asked of different people, so you get slightly different answers: "The information source is the key distinction between the two surveys: SEPH provides information related to occupied jobs based on a census of administrative data from businesses whereas LFS provides information on the employment characteristics of individuals based on a survey of households. As a result, from time to time, the estimates from the surveys can differ on a monthly basis. However, over the longer term, the estimates move in similar directions." However, the link also notes the two surveys treat the self-employed differently.

As for which one is better, StatsCan offers this unhelpful advice: "Since each of these surveys addresses different needs, the choice of data depends on the users' goals."

Self employment kicked in at the same time as the dot bust?

Are there that many self employed web designers?

If not that, what changed then?

Ah, thanks - I had thought of the self-employed, but I couldn't figure out why US analysts prefer to work with the establishment survey, which would also exclude them.

Good question. One I ought to have thought more about.

Why does it matter? Because we want to predict future employment. Which series forecasts best?

I wish I understood VARs better (I wish i understood econometrics better). Isn't there some sort of test one can do to tell which series has better forecasting power? In other words, does LFS help SEPH predict future SEPH? Does SEPH help LFS predict future LFS?

My eyeballs seems to think that SEPH looks noisier than LFS. Both are surveys, and so both should have some white noise error associated with sampling error.

I also find the two paragraphs contrasting SEPH and LFS to be insufficient. Is anyone aware of a more thorough treatment?

The problem with counting self-employment is that it adds to “employment” many jobless workers who are forced into marginal self-employment and/or prefer to report self-employment rather than unemployment. Most of the self-employment total is genuine, but I suspect that most of the surge in self-employment over the past year has been involuntary.

Andrew compared LFS employees to the SEPH total, so that neither figure included self-employment. This approach, which approximates an apples-to-apples comparison, reveals an even larger July discrepancy than noted by Stephen: a decrease of 0.56% versus an increase of 0.51%.

On the noise, LFS considers people on strike as employed while SEPH considers them unemployed. Might be small, but still a factor.

Another factor might be the underground economy. One of the sources for SEPH is CRA data on payroll etc, which for obvious reasons wouldn't include people that are employed, but not on record as such for tax or EI purposes.

I wonder if you could use the divergence between the two surveys to measure the size of the underground economy? Since the underground economy tends to include more services (child care, house cleaning, restaurants) and construction it might be more cyclical (but perhaps sex and drug sales would be more counter-cyclical, I don't know).

The LFS records employed and self-employed separately, I think, so that should be easy enough to net out.

"On the noise, LFS considers people on strike as employed while SEPH considers them unemployed. Might be small, but still a factor."

Wasn't CUPE Toronto and Windsor on strike in July?

If that was it, you'd expect the LFS to hold steady while the SEPH decreased. But the movement in July 2009 went the other way: the SEPH rose while the LFS fell.

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