Welfare caseloads in North America halved following reforms in the 1990s and 2000s. We study how this shift affected families by linking Canadian welfare records to tax returns, medical spending, educational attainment, and crime data. We find substantial and heterogeneous employment responses that increased average income despite reduced transfers. We find zero effects on aggregate health expenditures, but mothers saw reduced preventative care and increased mental health treatment, consistent with the transition to employment elevating time pressure and stress. We find no effect on teenagers’ education and criminal charges as young adults but do find evidence of intergenerational welfare transmission.

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Firm ownership is a defining feature of immigrant adaptation: 41% of immigrants own a firm at some point in their first 10 years post-arrival. We use Canadian data linking immigrant arrival records with individual and firm tax data to examine the process of entering firm ownership for immigrants. Higher immigrant firm ownership rates are mainly due to nonincorporated firm ownership, which looks like a last resort. Human capital plays no role in the opening of preferable, incorporated firms.
Immigrants are not more entrepreneurial in terms of opening incorporated firms with employees, and standard policy levers appear to have limited effects.

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This paper proposes an empirical approach to decompose the distributional effects of minimum wages into effects for workers moving out of employment, workers moving into employment, and workers continuing in employment. We estimate the effects of the minimum wage on the hazard rate for wages, which provides a convenient way of re-scaling the wage distribution to control for possible employment effects. We find that minimum wage increases do not result in an abnormal concentration of Job Leavers below the new minimum wage, which is inconsistent with employment effects predicted by a neoclassical model. We also find that, for Job Stayers, the spike and spillover effects of the minimum wage are simply shifted right to the new minimum wage. Our findings are consistent with a model where entry
wages are set according to a job ladder, and where firms preserve their internal wage structure due to fairness or internal incentives issues.

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In this paper we provide new estimates of the impact of unions on nonunion wage setting. We allow the presence of unions to affect nonunion wages both through the typically discussed channel of nonunion firms emulating union wages in order to fend off the threat of unionisation and through a bargaining channel in which nonunion workers use the presence of union jobs as part of their outside option. In our most complete model, we specify these channels in a search and bargaining framework that includes union formation and the possibility of nonunion firm responses to the threat of unionisation. Our results indicate an important role played by union wage spillovers in lowering wages over the 1980-2010 period. We find that de-unionisation can account for 35% of the decline in the mean hourly wage between 1980 and 2010 in the US, with two-thirds of that effect being due to spillovers. Both the traditional threat and bargaining channels are operational, with the bargaining channel being more important.

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In ‘The Town with No Poverty: The Health Effects of a Canadian Guaranteed Annual Income Field Experiment’ (published in the CPP in 2011), Professor Evelyn Forget examines community level health and education impacts of the 1970’s Manitoba Guaranteed Annual Income experiment (MINCOME). In this paper, I reassess the hospital use data from Forget(2011), arguing that once one takes account of pre-trends in the differences between the treatment and control samples, the data point to an increase in hospital use during MINCOME. This is the opposite of the conclusion reached in Forget(2011). Combined with results from Forget(2011) on birthweight of new borns, I argue that the MINCOME data does not support conclusions that the Guaranteed Annual Income either improved health or reduced health care costs.

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The extent to which K-12 schools should remain open is at the forefront of discussions on long-term pandemic management. In this context, there has been little mention of the immediate importance of K-12 schooling for the rest of the economy. Eliminating in-person schooling reduces the amount of time parents of school-aged children have available to work, and therefore reduces income to those workers and the economy as a whole. We discuss two measures of economic importance, and how they can be modified to better reflect the vital role played by K-12 education. The first is its size, as captured by the fraction of GDP produced by that sector. The second is its centrality, reflecting how essential the sector is to the network of economic activity. Using data from Canada's Census of Population and Symmetric Input-Output Tables, we show how accounting for this role dramatically increases the importance of K-12 schooling.

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In the large literature on polarization in the wage and employment structure, arguments about shifts in relative demands for different task based groups have been built on comparisons of movements in employment and wages.  In particular, increases in both wages and employment in cognitive task occupations relative to routine task occupations are the basis for arguments that Information Technology innovations are driving labor market polarization.  But movements in average wages by occupation are misleading measures for determining underlying demand forces for two reasons.  First, the workforce has undergone substantial compositional changes in terms of education levels, the age distribution, and the gender composition.  Second, it seems reasonable to assume that the large shifts in the proportion of workers in different occupations has been accompanied by shifts in composition in terms of unobservable task related abilities.  In this paper, we provide estimates of movements in task prices for the US for the period from 1984 to 2013.  To do this, we adjust for changes in observable variable composition and address selection on unobservables through a bounding exercise.  We tighten the bounds by appealing to the logic of standard Roy Models.  In particular, we derive and implement the bounds associated with different versions of the Roy Model based on different assumptions about the joint distribution of abilities across sectors.  We find that task prices for cognitive, routine and manual occupations increased strongly through the 1900s, with some evidence of polarization, but all three declined strongly, and to a similar extent, after 2000.

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Petit and Tedds (2020) show that single adults without children have notably higher and persistent poverty rates in B.C. than any other demographic group studied. This short note picks up on this finding and investigates the single adult without children group further to try to understand who they are and their sources of income. Using Census data, I find that there are three main groups of single adults living below the poverty line. First are those with earnings over $16,000 who are mainly young females that have completed high school, who tend to work much of the year and who live in the Lower Mainland and Victoria. Second are those who with mostly transfer income who are mostly older males who have not completed high school, who tend no to work and who do not live in the Lower Mainland or Victoria. Third are those who work up to half the year, but otherwise are very heterogenous except they tend to have more social insurance (employment insurance and pension) income and who may be aided by social insurance reform.
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One claim advanced for a Basic Income is that it can be administered through the tax system, making it more transparent, easier to access, and less costly to administer than other transfer approaches. Of course, these advantages are lessened to the extent that people do not file taxes. In this paper, we data from a combination of linked Census, tax and death records, data on opioid overdoses, data from BC’s IA system, and data from a survey of residents of Single Room Occupancy hotels in Vancouver to paint a picture of the extent and nature of “falling through the cracks” in the tax and transfer system. We find that between 3 and 6.6% of the Canadian population are not known to the tax system at all. Another group of people are in the tax system records but did not file in a given year. Adding these two groups together, we find that between 11% and 15% of the population are either not in the tax system at all or do not file taxes in a year.

The group who are in the tax records but did not file a T1 in a year are disproportionately non-earners from low income households. Not filing taxes shows considerable persistence across years. Thus, the problems associated with not filing taxes could end up focused on a small core of continual non-filers. The people not in the tax records or Census files at all are very disproportionately likely to have died from a death of despair (suicide, drugs or alcohol related) and to have died in low income neighbourhoods and neighbourhoods with a higher proportion of people who have moved in the previous year. This suggests that this is a vulnerable population. Given that they are missing from both tax related and survey attempts by the government to contact them, they would likely be a particularly difficult group to reach with tax-based social benefits.
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This paper documents various features of B.C. Income Assistance (IA), including durations of spells of IA, how durations differ according to recipient case characteristics, and how durations and case characteristics have changed over time from February 1989 through December 2017, based on official B.C. administrative data. The goal of the paper is to relate these patterns to key policy questions, and so it is framed as a set of main patterns, each followed by a list of policy implications.

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Basic income has been promoted as an important policy tool for a long list of reasons, ranging from supporting increased entrepreneurial activity to increasing mental health. In this paper, I assess some of the key claims made about the impacts of a basic income: that it is simple to implement by using the tax system; that it reduces the welfare wall, increasing labour supply among IA recipients; that it would increase volunteering and caregiving; that it would improve child well-being, education and development; that it would lead to an increase in entrepreneurship; that it would reduce crime rates; that it would improve health outcomes and reduce health care system costs; and that it would lead to higher wages and better working conditions for low wage workers. I also consider some claims about negative effects, raised by basic income opponents, such as the claim that it would lead to an overall decrease in labour supply in the paid labour market. The assessment is based on the research papers commissioned for British Columbia’s Expert Panel on Basic Income. Overall, some of the claims for positive effects from a basic income receive support from the empirical evidence while others do not but even where there are positive outcomes a basic income is often not the most direct way to achieve the outcome and it is often difficult to determine whether a basic income would be better than income received through other, conditional programs.

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In this paper, I assess the various claims made about how a basic income (BI) would affect paid work. Proponents of a BI argue that a BI would reduce the welfare wall and make it easier for people with low income to choose to work. Opponents tend to be concerned that a BI could induce a large-scale withdrawal from paid work and/or a reduction in the hours that people work with potentially problematic consequences for the productivity of the economy.

In the first section, I discussion of the theoretical issues related to a BI and work, pointing out that both proponents and opponents could be right in different ways at the same time. In that discussion, it also becomes evident that the extent of expected effects hinge critically on the impacts of a switch to a BI on the effective tax rates that people face. In the second section, I review the evidence from Milligan (2020) on the size and relevance of these tax rates. This highlights the extent of the problem and where we expect to see effects. However, the ultimate impacts on labour supply depend on how people react to the changes in effective tax rates. Those reactions show up in estimates of labour supply elasticities. In the third section, I review evidence on those elasticities. The labour supply estimates obtained from a variety of sources tend to point to quite low elasticities for both men and women in recent years (i.e., both would show only modest responses to wage and income changes associated with introducing a BI).

I use the labour supply elasticity estimates in combination with data from the 2016 Census to form estimates of effects of a basic income with a $20,000 guarantee and a 50% tax back rate. I do this in two exercises: one focused on those on IA for whom the basic income would lower the welfare wall; and one focused on workers.

Overall, based on estimates in various related literatures and an exercise using those estimates in conjunction with census data for B.C., a shift to a generous basic income scheme would likely have limited impacts on total hours worked in the economy. It would also likely have small effects in drawing IA recipients into work through lowering the welfare wall. At the same time, there are some groups—notably those without children—for whom predicted hours reductions are somewhat larger. Concerns for those groups could be mitigated by implementing a wage or earnings subsidy in conjunction with the basic income. But the key conclusion is that hours impacts are likely not large enough for them to be the main factor in deciding on whether to adopt a basic income.
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One of the main arguments that has been advanced in favour of a basic income is that we are going through a technology-driven transition that involves more precarious work and that will end with our economy having either very little paid work as we know it or having a preponderance of precarious jobs (low wage, low stability, low worker control). If that is the case, it is argued, then we need to look for ways to redistribute the production of the economy that is not related to work – either directly, through wages, or indirectly, through work related benefits such as employment insurance.

In this paper, I investigate this claim using both empirical evidence and an appeal to economic theory. I examine trends in work elements that characterize precarious work, such as the proportion of work that is part time, short tenure, or in self-employment as well as work arrangements that relate to worker control over their workplace, such as unionization rates and the proportion of employment in sectors characterized by “fissured” work. In addition, I examine patterns of employment, polarization, inequality, and changes in the share of income going to labour.

A picture emerges from these investigations of a labour market in which the precariousness of jobs increased in the 1980s and early 1990s while elements of work that relate to worker control and respect such as unionization follow a declining path that continues until the mid-2000s. In a similar vein, the theoretical discussions point to a plausible future with increased inequality. Thus the right question appears not to be, is the basic income the right tool for a jobless future? but, is it the right tool for a persistent set of problems reaching back well into the past?
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In this paper, I examine the relationship between a Basic Income (BI) as a policy tool and the functioning of the labour market. I focus on three key areas where a BI has been hypothesized to relate to labour markets: through altering work decisions; as a response to predicted changes in work arising from technological change; and as backstop that would allow workers to demand better working conditions and higher wages. I provide answers on the role or impact of a BI in each area in the context of the current Canadian labour market. But a key focus in the paper is on the ways we could alter our labour market models to provide a better basis for debating the impacts of policies like a BI in the context of a goal of moving toward a more just society.

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This paper documents two COVID-related risks, viral risk and employment risk, and their distributions across the Canadian population. The measurement of viral risk is based on the VSE COVID Risk/Reward Assessment Tool, created to assist policymakers in determining the impacts of economic shutdowns and re-openings over the course of the pandemic. We document that women are more concentrated in high viral risk occupations and that this is the source of their greater employment loss over the course of the pandemic so far. They were also less likely to maintain one form of contact with their former employers, reducing employment recovery rates. Low educated workers face the same virus risk rates as high educated workers but much higher employment losses. Based on a rough counterfactual exercise, this is largely accounted for by their lower likelihood of switching to working from home which, in turn, is related to living conditions such as living in crowded dwellings. For both women and the low educated, existing inequities in their occupational distributions and living situations have resulted in them bearing a disproportionate amount of the risk emerging from the pandemic. Assortative matching in couples has tended to exacerbate risk inequities.

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The proportion of UK people with university degrees by age 30 more than doubled between those born in 1965-69 and those born ten years later. However, the age prole of the graduate wage premium remained largely unchanged across cohorts. We show that these patterns cannot be explained by composition changes. Instead,we present a model in which rms choose between centralized and decentralized organizational forms and demonstrate that it can explain the main patterns. We also show the model has implications that dierentiate it from standard exogenous technological change models and that UK data t with those implications. We argue that our model of endogenous technological choice is plausible for the UK because of its status as a technological follower where workplaces only adopt frontier IT related technologies when educational levels in the labour force are high enough.
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We propose and estimate a novel specification of the labor demand curve incorporating search frictions and the role of entrepreneurs in new firm creation. Using city-industry variation over four decades, we estimate the employment wage elasticity to be -1 at the industry-city level and -0.3 at the city level. We show that the difference between these estimates likely reflects the congestion externalities predicted by the search literature. Also, holding wages constant, an increase in the local population is associated with a proportional increase in employment. These results provide indirect information abut the elasticity of job creation to changes in profits.

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Since 2000, US real average wages have either stagnated or declined while Canadian average wages increased by almost 10%. We investigate the role of the Canadian resource boom in explaining this difference. We construct a model of wage setting that allows for spillover effects of a resource boom on wages in non-resource intensive locations and formulate an empirical specification based on that model. A key feature of this (and other) resource booms was the prevalence of long distance commuting - working in a resource location but residing in another community. The core idea in our model is that the expansion of the value of the commuting option during the boom allowed non-commuters to bargain higher wages. We find that wages do rise in areas with more long distance commuting. Combining these spillover effects with bargaining spillover effects in resource boom locations, we can account for 49% of the increase in the real mean wage in Canada between 2000 and 2012. We find similar effects of long distance commuting on wages in the US but the resource boom was less salient in the US and the effect on wages was one-tenth of that in Canada. Our results have implications for other papers measuring the impacts of resource booms on wages in surrounding areas. Our main finding is that long-distance commuting can integrate regions in a way that spreads the benets and costs of a boom across the economy.

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[Appendices]

We assess the current state of knowledge in the economics of immigration and consider how economic theories of knowledge can be used to further the goal of developing a just immigration policy. In the process, we highlight the contributions of economists working in Canada and Canadian economists internationally in furthering our understanding of this important research area. We identify research gaps such as the need for more research on the underlying causes of the poor returns to foreign work experience for immigrants from non-traditional source countries and the eect of immigrants on stimulating innovation. More research is also needed on the implications of temporary foreign worker (TFW) programs and the growing importance of employers in immigrant selection systems.

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What explains the current low rate of employment in the US? While there has been substantial debate over this question in recent years, we believe that considerable added insight can be derived by focusing on changes in the labor market at the turn of the century. In particular, we argue that in about the year 2000, the demand for skill (or, more specifically, for cognitive tasks often associated with high educational skill) underwent a reversal. Many researchers have documented a strong, ongoing increase in the demand for skills in the decades leading up to 2000. In this paper, we document a decline in that demand in the years since 2000, even as the supply of high education workers continues to grow. We go on to show that, in response to this demand reversal, high-skilled workers have moved down the occupational ladder and have begun to perform jobs traditionally performed by lower-skilled workers. This de-skilling process, in turn, results in high-skilled workers pushing low-skilled workers even further down the occupational ladder and, to some degree, out of the labor force all together. In order to understand these patterns, we offer a simple extension to the standard skill biased technical change model that views cognitive tasks as a stock rather than a flow. We show how such a model can explain the trends in the data that we present, and offers a novel interpretation of the current employment situation in the US.

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I undertake a political economy exercise of a type described in John Rawls' A Theory of Justice; namely, one in which economic institutions are judged by how well they match the key principles in theories of distributive justice.  My main contention is that such an exercise is integrally related not only to economics in general but to empirical economics in particular.  I argue that most standard theories of justice place a large weight on self and social respect and that such respect has alot to do with the position a person holds in the productive process - their wage and employment outcomes.  That, in turn, means that assessments of justice in the real world hinge critically on how labour markets actually function in assigning wages and employment.  The answers to these questions are ultimately empirical.  I explore these ideas by examining one particular institution (the minimum wage) in relation to a set of the most prominent recent theories of distributive justice.  This exercise leads to a different emphasis on what minimum wage related outcomes need study, and to a claim that minimum wage setting is related to standards of fairness defined relative to the location of the low skilled wage distribution.

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This paper was presented as the Innis Lecture at the 2015 Canadian Economics Association Annual Meeting at York University, Toronto.  Parts of this paper are based on join work with Paul Beaudry and Benjamin Sand.  I owe them both a huge debt for all that I have learned from them.  I am grateful to Paul Beaudry, Kelly Foley, Andrew Green, Craig Riddell and Benjamin Sand for insightful comments on and discussions about earlier drafts of this paper.

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We use newly available micro data samples from the 1911, 1921, 1931 and 1941 Canadian Censuses to investigate the impact of immigration on the Canadian earnings distribution in the first half of the 20th Century.  We show that earnings inequality increased dramatically between 1911 and 1941, with most of the change occurring in the 1920s.  This coincided with two of the largest immigration decades in Canadian history (the 1910s and 1920s) and then the smallest immigration decade (1930s).  We find, however, that immigration was not a prime cause of the increase in inequality in these years.  The relative lack of effect arose for three reasons.  1) in the laissez-faire immigration policy before WWI, immigrants self-selected to have an occupational distribution that was similar to that of the native born; 2) in the 1920s, when immigration policy brought in a large number of farm labourers, immigrants adjusted geographically and occupationally after arrival to again end up with an occupational distribution similar to that of the native born; 3) general equilibrium adjustments in the economy helped mitigate the effects of occupation-specific immigrant supply shocks.

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We use Census and Labour Force Survey (LFS) data for the period from 1971 to 2012 to investigate whether the Canadian wage and employment structures have polarized, that is, whether wages and employment have grown more in high and low than in middle paying occupations. We find that there has been faster growth in employment in both high and low paying occupations than those in the middle since 1981. However, up to 2005, the wage pattern reflects a simple increase in inequality with greater growth in high paid than middle paid occupations and greater growth in middle than low paid occupations. Since 2005, there has been some polarization but this is present only in some parts of the country and seems to be related more to the resource boom than technological change. We present results for the US to provide a benchmark. The Canadian patterns fit with those in the US and other countries apart from the 1990s when the US undergoes wage polarization not seen elsewhere. We argue that the Canadian data do not fit with the standard technological change model of polarization developed for the U.S..

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We use a large, rich Canadian micro-level dataset to examine the channels through which family socio-economic status and unobservable characteristics affect children's decisions to drop out of high school. Our data suggest that teenage boys with two parents who are themselves high school dropouts have a 16% chance of dropping out, compared to a dropout rate of less than 1% for boys whose parents both have a university degree. We develop and estimate an extended version of the factor model set out in Carneiro et al. (2003) in which we identify the impact of cognitive and non-cognitive ability, as well as the value that parents place on education. Our results support three main conclusions. First, cognitive ability at age 15 has a substantial impact on dropping out. The highest ability individuals are predicted never to drop out regardless of parental education or parental valuation of education. In contrast, the lowest ability teenagers have a probability of dropping out of approximately .36 if their parents have a low valuation of education. Second, parental valuation of education has a substantial impact on medium and low ability teenagers. A low ability teenager has a probability of dropping out of approximately .03 if his parents place a high value on education but .36 if their educational valuation is low. These effects are estimated while conditioning on ability (as of age 15) and they reflect parental influences during the upper teenage years, above and beyond any impact they might have had in the early development leading up to age 15. Third, parental education has no direct effect on dropping out once we control for ability and parental valuation of education. Overall, our results confirm the importance of whatever determines ability by age 15 (such as early childhood interventions) but they also point to an important role for parental valuation of education during the teenage years. Finally, our model presents a small methodological contribution by extending the standard unobserved-factor estimator to allow for a non-linear relationship between the factors and some co-variate of interest. We show that allowing for such non-linearities has a very substantial impact on estimates.

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In this paper, we present a spatial equilibrium model where search frictions hinder the immediate reallocation of workers both within and across local labour markets. Because of the frictions, firms and workers find themselves in bilateral monopoly positions when determining wages. Although workers are not at each instant perfectly mobile across cities, in the baseline model we assume that workers flows are sufficient to equate expected utility across markets. We use the model to explore the joint determination of wages, unemployment, house prices and city size (or migration). A key role of the model is to clarify conditions under which this type of spatial equilibrium setup can be estimated. We then use U.S. data over the period 1970-2007 to explore the fit of model and it quantitative properties of the model. Our main goal is to highlight forces that influence spatial equilibria at 10 year intervals.

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We investigate differences in labour market transition rates in high versus low minimum wage regimes using Canadian data spanning 1979 to 2008. The data include consistent questions on job tenure and reason for job separation for the whole period. Over the same time frame, there were over 140 minimum wage changes in Canada. We find that higher minimum wages are associated with lower hiring rates but also with lower job separation rates. Importantly, the reduced separation rates are due mainly to reductions in layoffs, occur in the first 6 months of a job, and are present for unskilled workers of all ages. Our estimates imply that a 10% increase in the minimum wage generates a 3.9% reduction in the layoff rate. We also find that the transition rate from out-of-the-labour-force (N) to unemployment (U) is lower when the minimum wage is higher and that the U to N rate is higher, implying that labour supply is reduced when the minimum wage is higher. We present a search and matching model that fits with these patterns and test its implications. Overall, our results imply that jobs in higher minimum wage regimes are more stable but harder to get. For older workers, these effects almost exactly offset each other, resulting in little impact on the employment rate. One might conclude from the small impact of minimum wages on the employment rate that they do not affect the labour market for older workers but our results indicate this is not true.

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Does switching the composition of jobs in an economy between low-paying industries and high-paying industries have important effects on wages in other sectors? The answer to this question is central to a proper assessment of many trade and industrial policies. In this paper, we build on a search and bargaining model of the labour market to clarify a key general equilibrium channel through which changes in industrial composition could have substantial effects on wages in all sectors. In particular, we show that the equilibrium determination of wages in that model takes the form of a classical social interaction problem (or reflection problem), and we show how the implied linkages can be empirically explored. In our empirical implementation, we use U.S. Census and American Community Survey data over the years 1970 to 2007 to estimate the equilibrium effects of changes in industrial composition on within-sector wages. Our findings are that sectoral-level wages act as strategic complements in a manner consistent with a social interaction model, and that the general equilibrium effects associated with changes in the fraction of jobs in high paying sectors are very substantial and persistent. Our point estimates indicate that the total effect on average wages of a change in industrial composition favouring high paying sectors is about 3.5 times that obtained from a commonly used decomposition approach which neglects general equilibrium effects. We interpret our results as highlighting the relevance of a search and bargaining model for understanding the general equilibrium determination of wages, and we argue that our results provide considerable support for the view that changes in industrial composition are important for understanding labour market outcomes.

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We identify the effect of individual high school principals on graudation rates and English exam scores using an administrative data set of grade 12 students in BC Canada. Many principals were rotated across schools by districts, permitting isolation of the effect of principals from the effect of schools. We estimate the variance of the idiosyncratic effect of principals on student outcomes using semi-parametric technique assuming the effect is time invariant. We also allow for the possibility that principals take time to realize their full effect at a school.

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Considering immigrant earnings in the context of post-arrival human capital investment implies: cohort quality should be defined in terms of the present value of the whole earnings profile; and, an appropriate definition of "macro " effects is obtained using the earnings profile of the native born cohort entering the labour market at the same time as an immigrant cohort. We illustrate this using Canadian immigrant earnings, where there were large cross-cohort earnings declines in the 1980s and 1990s. We find that changes affecting all new entrants play an important role in understanding immigrant earnings. In contrast, earlier approaches imply that "macro" events explain little of immigrant earnings patterns.

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We study the relationship between age and literacy skills in Canada,Norway and the U.S.—countries that represent a wide range of literacy outcomes — using data from the 1994 and 2003 International Adult Literacy Surveys. In cross-sectional data there is a weak negative partial relationship between literacy skills and age. However, this relationship could reflect some combination of age and cohort effects. In order to identify age effects, we use the 1994 and 2003 surveys to create synthetic cohorts. Our analysis shows that the modest negative slope of the literacy-age profile in cross-sectional data arises from offsetting ageing and cohort effects. Individuals from a given birth cohort lose literacy skills after they leave school at a rate greater than indicated by cross-sectional estimates. At the same time, more recent birth cohorts have lower levels of literacy. All three countries show similar patterns of skill loss with age, as well as declining literacy across successive cohorts.

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Theoretical and empirical work seems to support the idea that tight labour markets driven by resource booms induce young individuals to leave school for employment as the opportunity cost of schooling increases. Resource booms may have an adverse long term effect on the productivity of the labor force if workers under-invest in human capital rather than merely altering the timing of schooling. We explore the validity of this thesis using the Albertan 1973-1981 oil-boom, which created a period of rapid growth both in wages and employment in Alberta relative to the rest of Canada, and analyze the effect of this oil-boom on the long-term human capital investments and productivity for birth cohorts that were of normal schooling ages before, during and after the oil boom. Our findings suggest that resource booms may change the timing of schooling but do not seem to affect greatly the total accumulation of human capital.

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In June, the federal government published plans to replace the mandatory 'long form' census with a new National Housing Survey for the 2011 census cycle. The new NHS is to be circulated to more households, but will be voluntary rather than mandatory. The announcement generated a response unique both for its breadth across civil society and its near uniformity. The breadth of response reflects the plethora of uses for census data, stretching into so many important decisions made by businesses, municipal and provincial governments, and non-profits. The near uniformity of response reflects the certainty of science on the statistical nature of voluntary versus mandatory sampling techniques. In this piece, we begin by showing the statistical importance of the distinction between voluntary and mandatory sampling techniques. We then proceed to explain how the ubiquity of the census in Canada's national statistics is even greater than many appreciate due to the role of the census as the ultimate benchmark for other surveys. Finally, we close with thoughts on the role of government in the realm of statistics.

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We examine the wage patterns of Canadian less skilled male workers over the last quarter century by organizing workers into job entry cohorts. We find entry wages for successive cohorts declined until 1997, and then began to recover. Wage profiles steepened for cohorts entering after 1997, but not for cohorts entering in the 1980s - a period when start wages were relatively high. We argue that these patterns are consistent with a model of implicit contracts with recontracting in which a worker's current wage is determined by the best labour market conditions experienced during the current job spell.

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In this paper, we investigate the relationship between the substantial changes in tax and transfer programs and the movements in after-tax income inequality over the 1980s and 1990s. We show that in the 1980s, tax and transfer programs became more redistributive, offsetting substantial increases in market income inequality. In the 1990s, the tax and transfer system stopped undoing the increases in market income inequality, leading aftertax income inequality to rise. Even so, tax and transfer programs were more redistributive in 2000 than in the 1980s. Much of the changes occurred at the provincial level, with social assistance payments first increasing (in the late 1980s) then decreasing (in the late 1990s) and with surtaxes on high income earners being first imposed and then subsequently removed.

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Human capital policy has come to be seen as something of panacea: acting both as a necessary input for modern growth and an effective tool for redistribution. Canada has moved strongly in the direction of linking redistribution and human capital investment. In this paper, I investigate the empirical evidence and theoretical arguments behind the claim that increasing skills investment opportunities and tying transfers to human capital investments while decreasing traditional income support will ultimately lead to a more equal, more just society. Whether this is true, of course, will depend on the notion of justice one adopts. One of my goals in this paper is to examine the implications of the kind of policy path Canada is following under different notions of fairness. I conclude that both empirical evidence and fairness considerations indicate that human capital policy does not make good redistributive policy.

link to paper not available.

We examine the impact of high school graduation on the probability individuals from welfare backgrounds use welfare themselves. Our data consists of administrative educational records for grade 12 students in a Canadian province linked with their own and their parents' welfare records. We address potential endogeneity problems by: 1) controlling for ability using past test scores; 2) using an instrument for graduation based on school principal fixed effects; and 3) using a Heckman- Singer type unobserved heterogeneity estimator. Graduation would reduce welfare receipt of drop- outs by ½ to 3/4. Effects are larger for individuals from troubled family backgrounds and low income neighbourhoods.

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We present new evidence on levels and trends in after-tax income inequality in Canada between 1980 and 2000. We argue that existing data sources may miss changes in the tails of the income distribution, and that much of the changes in the income distribution have been in the tails. Our data are constructed from Census files, which are augmented with predicted taxes based on information available from administrative tax data. After validating our approach in predicting taxes on the Census files, we document differences in the levels and trends in after-tax inequality between the newly constructed data source and the more commonly used survey data. We find that after-tax inequality levels are substantially higher based on the new data, primarily because income levels are lower at the bottom than in survey data. The new data shows larger long-term increases in after-tax income inequality and far more variability over the economic cycle. This raises interesting questions about the role of the tax and transfer system in mitigating both trends and fluctuations in market income inequality.

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This paper uses the 1993 and 1997 Adult Education and Training Survey (AETS) to look at the effect of unions on the incidence and sources of payment for training in Canada. Simple tabulations indicate that union workers are more likely to engage in training activities than non-union workers. The higher incidence of training among union workers is driven by the fact that they are more likely to take training courses offered by their employers than non-union workers. This suggests that union workers are more likely to participate into training activities that enhance their firm-specific human capital. This union effect disappears, however, once we control for a variety of factors such as age, education, and in particular firm size and seniority. Everything else being equal, unions have little effect on the provision of training in Canada. Finally, we present some limited evidence that unions help increase the participation of firms into the financing of training activities.

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We use a special Canadian dataset containing both literacy test scores and standard labour market variables to examine the impact of literacy on immigrant earnings. Having a literacy measure allows us to examine issues related to discrimination and the sources of lower returns to foreign acquired education and experience among immigrants. We find that the native-born literacy distribution (assessed in English or French) dominates that for immigrants. However, immigrants and the native born appear to obtain the same return to their literacy skills. We argue that this does not support a discrimination explanation for immigrant-native born earnings differentials. Immigrant shortfalls in literacy can account for about one-half of the earnings gap between university educated immigrants and similarly educated native-born workers. However, low returns to foreign acquired experience have a larger impact on the differential and those low returns are not related to literacy differences. Thus, low literacy among immigrants is an important input to understanding immigrant-native born earnings differentials but is not the dominant explanation.

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Over the last few decades, countries have experienced quite different patterns of productivity growth. In this paper, we emphasize the role of country level demo- graphics in explaining these differences. In particular, looking over the period 1960–2002, we show that cross-country data support the notion that, starting in the late 1970s, countries went through a period of technological transition that lasted at least until the mid-1990s for the fastest adjusting countries and is still proceeding for the slower adjusting countries. The main claim of the paper is that the country-level rate of labour growth was a key factor driving the speed of adjustment to the new technological paradigm, implying that much of the cross-country difference in economic performance over recent decades can be explained by demographic differences across countries as opposed to the many other factors emphasized in the literature.

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Why have some countries done so much better than others over the recent past? In order to shed new light on this issue, this paper provides a decomposition of the change in the distribution of output–per–worker across countries over the period 1960–98. The main finding of the paper is that most of the change in shape of the world distribution of income between 1960–1998 can be accounted for by a very substantial and previously unrecognized change in the parameters driving the growth process. In particular, we show that the role of capital deepening forces – that is the role of investment rates and population growth in affecting output – increased dramatically over the period 1978-98 versus 1960-78, and that this increase can account for almost all the observed changes in the world distribution. In contrast, we do not find any significant effects coming through non–linear convergence mechanisms or increased importance of education; both of which have played prominent roles in recent discussion of economic performance. Our results therefore highlight that the period 1978-98 was particularly advantageous to countries which strongly favored capital accumulation, and hence suggests that research aimed at understanding recent differences in economic performances across countries needs to focus on explaining why the social returns to physical capital accumulation where abnormally high over the period 1978-98.

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This paper examines the determinants of changes in the US wage structure over the period 1976-2000, with the objective of evaluating whether these changes are best described as the result of ongoing skill-biased technological change, or alternatively, as the outcome of an adjustment process associated with a major change in technological opportunities. The main empirical observation we uncover is that change in both the level of wages and the returns to skill over this period appear to be primarily driven by changes in the ratio of human capital (as measured by effective units of skilled workers) to physical capital. Although at first pass this pattern may appear difficult to interpret, we show that it conforms extremely well to a simple model of technological adoption following a major change in technological opportunities. In contrast, we do not find much empirical support for the view that ongoing (factor-augmenting) skill-biased technological progress has been an important driving force over this period, nor do we find support for the view that physical capital accumulation has contributed to the increased differential between more and less educated workers; in fact, we find the opposite.

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We derive Local Average Treatment Effect estimates of the impact of welfare benefit denial on future receipt using a unique experiment involving reassessment of some applicants who were originally slated to receive benefits. We find evidence of considerable heterogeneity among applicants. Our results support a model with a peripheral group who exhibit scarring effects from being granted benefits and a core group who do not. The core group moves quickly back onto welfare when they are denied benefits. Even for the peripheral group, benefit denial has intermediate term but not permanent impacts.

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This paper uses direct measures of literacy to examine the influence of cognitive and unobserved skills on earnings. We find that cognitive skills contribute significantly to earnings and that their inclusion in earnings equations reduces the measured impact of schooling. The impact of literacy on earnings does not vary across quantiles of the earnings distribution; schooling and literacy do not interact in influencing earnings; and introducing literacy has little effect on the estimated impact of experience. Our findings suggest that cognitive and unobserved skills are both productive but that having more of one skill does not enhance the other's productivity.

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Over the last twenty years the wage-education relationships in the US and Germany have evolved very differently, while the education composition of employment has evolved in a surprisingly parallel fashion. In this paper, we propose and test an explanation to these conflicting patterns. The model we present has two important elements: (1) technological change arises in the form of an alternative production process as opposed to being in the factor augmenting form, which renders technological adoption endogenous, (2) aggregate production depends on three factors (physical capital, human capital and labor). Based on this framework, we show why imbalances in the accumulation of human versus physical capital will be especially detrimental to low skill workers when the new technology is skill-biased and exhibits capital-skill complementarity. Using matched files from the PSID (US) and the GSOEP (Germany), we demonstrate how factor movements within these countries are associated with wage changes that are strongly supportive of our endogenous technological adoption model. Our conclusion is that the difference in the US and German experiences appear driven by the US having under-accumulated physical capital relative human capital over the 1979-96 period, while Germany accumulated factors in a more balanced manner.

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We examine the economic goals of current immigration policy and what role immigration should play in overall economic policy. We proceed by describing the economic goals of immigration policy throughout this century. We then describe current economically targeted elements of immigration policy and relate them to historical trends. Finally, we examine a set of potential economic goals for immigration suggested by Canada's policy history. We conclude that economic goals should not form the defining orientation of immigration policy in the near future since other policies are better situated to meet those goals. Immigra- tion should continue as a defining element in our social fabric.

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Recent surveys on the labor-supply responses of men document a divergence in the estimates of substitution and income effects obtained using various estimation approaches. Generally, stud- ies accounting for nonlinear tax schedules in a static setting via a piecewise-linear approach produce estimates that typically im- ply higher substitution and lower income responses than are suggested by empirical work applying other approaches. This paper demonstrates that maximum likelihood estimation of a consumer-choice problem with nonlinear budget sets implicitly relies on the satisfaction of inequality constraints that translate into behaviorally meaningful restrictions. These constraints arise not as a consequence of economic theory, but instead as a re- quirement to create a properly defined statistical model. In the analysis of piecewise-linear budget sets, the implicit constraints required by maximum likelihood in estimation amount to imposi- tion of Slutsky conditions at all wage-income combinations asso- ciated with kink points. In the analysis of differentiable budget sets, the tacit constraints invoked by maximum likelihood also involve inequality restrictions on Slutsky terms. The empirical work presented in this study supports the contention that these implicit constraints play a major role in explaining the dis- crepancies in estimates found in the literature on men's labor supply.

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