Canadians are less inclined towards marriage than Americans. How much less?
Canadians are less inclined towards marriage than Americans. How much less?
Smokers smoke. Gamblers gamble. Drinkers drink. Why should anyone else care?
Some non-economists believe that economics assumes selfishness. Each person is only concerned about themselves, and their material consumption. Selfishness can be represented formally like this:
A person's "utility", their well-being or happiness, is a function, u, of their consumption of goods and services, represented by the vector x.
An entirely selfish person doesn't care if others smoke or gamble or drink. Her well-being depends only on her own consumption. Live and let live (or, as the song goes...).
Matt Krzepkowski and Jack Mintz have recently produced a working paper titled "No More Second-Class Taxpayers: How Income Splitting Can Bring Fairness to Canada's Single-Income Families." The paper argues that higher income single-earner married couples are "disadvantaged by the current system." It proposes to put an end to that by allowing income splitting, so a one earner couple with income of $200,000 a year would pay about the same taxes as a two-earner couple where each person earned $100,000 per year.
The Krzepkowski and Mintz paper is the latest salvo in a long war over the best tax treatment of the family. Alexandre Laurin and Rhys Kesselman produced an analysis of income splitting for the CD Howe Institute in 2011, and back in 2000, Carole Vincent and I wrote a paper on Taxing Canadian Families for IRPP (downloadable here: Vincent_Woolley).
While cleaning out the the bottom drawer of my filing cabinet I came across a number of other, older studies of the taxation of families in Canada. As most are in the public domain, but difficult or impossible to obtain elsewhere, I thought I'd post them here. What is remarkable about them is the degree to which they presage the current policy debates - most of the ideas in the Krzepkowski and Mintz paper were brought forward and discussed in the 1960s and 70s. Understanding why they were rejected then may help clarify the current policy debate.
Last fall I stopped talking about the economics of gender, and began talking about the economics of sex. It was wonderful.
So much can be discussed under the rubric of economics of sex. Take, for example, the pick-up artist phenomenon, described in books like The Game. It's like Cesar Millan's Dog Whisperer books, urging men to be alphas, take a leadership role, and ignore begging and requests for attention. The major difference as far as I can see is that pick-up artists aim to make women come to bed, rather than dogs come to heel.
In much of North Eastern India, there are 915 or fewer girls for every thousand boys - a sex ratio of more than 1.09 boys per girl. The persistence of such high sex ratios is puzzling, because it violates Fisher's Principle.
In most species, the ratio of males to females is approximately one to one. Fisher's principle explains why. In a society with fewer females than males, females achieve, on average, greater reproductive success than a typical male. Accordingly, any inheritable tendency that predisposes parents to producing females spreads. The number of females rises until, eventually, equality between males and females is restored.
So how can son preference persist?
Well, after my last post I finally got around to calculating another measure of the birth rate – births per capita. Total births are a useful aggregate but the measure does not adjust for population size. There are other fertility measures out there such as births per woman aged 15 to 44 years but per capita births is a nice intuitive measure that adjusts for population size and can be readily compared to other numbers – such as per capita income. Moreover, it was easy to calculate.
It would appear that the severity of the global recession is affecting fertility rates in many countries. The fertility rate as measured by the number of live births per woman in Europe has dropped substantially in a number of countries according to The Economist. These results suggest that rather than lowering the opportunity cost of having children, recessions create the economic uncertainty that makes those about to undertake breeding much more skittish and therefore more likely to postpone childbearing. Unemployment and enchanted romantic evenings are not positively correlated.
The Globe and Mail website doesn't cope with data and graphics easily, so I'm reproducing my most recent Economy Lab post, along with data tables that couldn't be included in the G&M piece, here:
Two stories in the Toronto Star this week have left me wondering if there is a new grand strategy at work for transforming Ontario’s economy in the wake of its manufacturing decline.
Wealth and income inequality is a big issue and I thought some historical perspective on wealth inequality might be interesting given that my research to date has led me to conclude that little has changed for the bottom of the wealth distribution at least in terms of relative wealth shares. While there has been the growth of a middle wealth holding class over the last one hundred years in Canada, the wealth share of the bottom half of the wealth distribution is remarkably unchanged.
One of the puzzling things about the United States is its extraordinarily high marriage rate. Among OECD countries, only Turkey and Cyprus have a higher rate of marriage (Source, OECD).
men spend more of the income they control for their own consumption than do women. Alcohol, cigarettes, status consumer goods, even "female companionship" are noted in these studies.
Another well known paper found that a UK policy change that transferred resources from fathers to mothers resulted in more spending on women's and children's clothing. If expenditure patterns change when one sex gains more control over household income, it makes sense that savings behaviour would change too.
But who is more likely to save, men or women?
In the United States, surrogate mothers receive fees of about $20,000 to $25,000 for their services. In Canada, the U.K., Australia and a number of other countries, commercial surrogacy is outlawed, but surrogates are compensated for expenses, for example, clothing, food, prenatal vitamins, childcare, travel costs, lost wages, medications, medical bills, etc. In the U.K., reported expenses range from £4,500 (in an arrangement that went awry) to £7,000-£15,000.
Compensation for expenses is not taxable income, but commercial fees are. There are, therefore, tax advantages to structuring a contract as "expenses" not "income."
They all have children borne by surrogate mothers.
In Canada, as in the UK, Australia, France and several other countries, it is illegal to pay surrogate mothers for anything more than their expenses -- food, living costs, forgone wages, and so on.
Holiday parties are a time for conspicuous production: "Would you like some bread with sun-dried tomatoes - I just baked it this afternoon? The tomatoes? Oh, they're nothing - I had stacks of them in my garden this year, so I dried them in the solar-powered food drier that I built last summer."
It wasn't always this way. In grade 4, my best friend Suzanne always got Wagon Wheels in her lunch box. How I envied her. I just had boring home made cookies. Back then, prepared foods were relatively expensive, and their consumption signaled social status.
Fast forward a generation. Many middle-class families rely on two incomes to pay the mortgage, and time has become the scarce resource. Sure, I could afford to buy Wagon Wheels for my kids. I don't, because granola bars are (slightly) healthier. It wouldn't matter anyways. The new status good is a home made cookie - when time is precious, anything home made is a luxury.
My Economy Lab column this week is about Missing women in China – and Canada too?
Recent research by Douglas Almond, Lena Edlund, and WCI regular Kevin Milligan has found evidence of "son preference" - families planning their children to make sure that they have at least one son - within some ethnic groups in Canada. The paper does a number of careful and rigorous tests which are hard to explain in 400 words or less, but this finding is simple and easy to understand:
Today the BBC reports that child benefit is to be axed for higher-rate taxpayers.
Some background: ideally, a person's tax liabilities reflect his or her ability to pay taxes. Most tax systems recognize that having children reduces ability to pay, so provide parents with some kind of tax relief.
In the late 1970s, the British government changed its "child tax allowance" - a tax deduction generally claimed by the higher income parent - into a child benefit, received by the mother. The policy provided greater benefits to lower income parents, who did not earn enough to benefit from the child tax allowance, and put income in the hands of mothers. It made a difference: Shelley Lundberg, Robert Pollak and Terry Wales found that families began spending more money on goods for children after child benefits were introduced.
The latest announcement means that "any couples where one parent earns about £44,000" will have to repay some or all of their child benefit.