Worthwhile Canadian Initiative

Visible minorities: Distinctly Canadian

As far as I know, Canada is the only country that divides its population into "visible minorities" and "non-visible minorities." In this post, I describe how, and why, Canada counts people this way.

A person's visible minority status is ascertained by asking:

"Is this person....White, South Asian (e.g., East Indian, Pakistani, Sri Lankan, etc.), Chinese, Black, Filipino, Latin American, Arab, Southeast Asian (e.g., Vietnamese, Cambodian, Malaysian, Laotian, etc.), West Asian (e.g., Iranian, Afghan, etc.), Korean, Japanese, Other - Specify" (Source: National Household Survey): 

Respondents may choose more than one option, or provide a write-in answer. The responses are coded as follows:

• white = not visible minority
• white and  West Asian, Arab, or Latin American = not visible minority
• West Asian, Arab or Latin American (as a single response) = visible minority
• any other response = visible minority

Note that there is no "Aboriginal" option. No one claiming Aboriginal ancestry is asked to respond to the survey question. Aboriginal Canadians are not "visible minorities" according to the official, statistical definition.

The Challenges of Mark Carney’s European "Mission Civilisatrice"

In his farewell address to Canada before assuming the reins of the Bank of England, Mark Carney argues that Canada works because of the strength of the Canadian federation when it comes to its institutional framework and its four critical advantages of responsible fiscal policy, sound monetary policy, a single and resilient financial system and a monetary union that works.  One cannot help but think that on these four pillars, Mark Carney will build his new international role in Europe.

The (slowly) changing face of Ontario economics departments

When I was an undergraduate, many of my professors were Canadian born and American trained. The demographic profile of Canada, and of Canadian economics classrooms, has changed since then, as our country has recruited high skilled immigrants from around the world. But has there been a corresponding change in the demographic composition of the professoriate?

As part of my on-going research project with Anindya Sen and Marcel Voia on hotness and earnings, I've been gathering data on the educational backgrounds of Ontario economics professors - where they received their first degrees, and where they studied for their PhDs. Some preliminary results are shown over the fold:

Boys, retention, and multiple regression

A followup to my previous post on university retention and males.

Assume boys and girls are identical, except: there's something in the water at high schools that causes boys to do worse than girls; and there's something in the water at universities that causes boys to do worse than girls.

Suppose you had a data set for all university students, that told you for each student i: that student's performance at university Ui; that student's performance at high school Hi; and that student's sex Si (Si=1 for male, Si=0 for female).

Suppose you ran a multiple regression of Ui on Hi and Si:

Ui = a + bHi + cSi + ei

What would you expect to find?

The intercept is negotiable, the slope is fixed

A new hire only gets one chance to negotiate: a brief window between the time that an offer is made and the time when that offer is accepted. Those initial terms and conditions determine the employee's salary for years to come - possibly the entire the duration of his or her time at the institution. 

Think of a graph with job tenure (years of service) on the horizontal axis, salary on the vertical, and a curve showing the evolution of a person's salary over time. Roughly speaking, the intercept of that curve is negotiable, and the slope is, if not entirely fixed, at least largely independent of a person's initial starting salary (for references, see here). 

An extra $100 in starting salary means an extra $100 in salary each and every year - until one jumps to a different pay scale, gets a salary-boosting outside offer, or hits a salary ceiling - none of which may ever happen. Hence, If one is offered a job, it is critically important to negotiate. 

Collegiality as a positive externality

Yesterday my contact at the Globe asked me to write something about Yahoo CEO Marissa Mayer's decision to scrap the company's teleworking policy. The final product is here. 

Why don't we have disinflation (until now)?

Just a quickie, between meetings.

Paul Krugman asks "Why don't we have deflation?" His answer is: downward nominal wage rigidity. And he shows that graph of frequency distribution of nominal wage changes with a big spike at zero.

I don't think that's quite the right question. So I don't think that's quite the right answer. (Even though, sure, that graph is almost certainly telling us something important.)

"Deflation" means falling prices (a negative inflation rate). "Disinflation" means a falling rate of inflation, so prices rise less quickly than they did before. My question is: why don't we have disinflation (until now)?

Labour supply, lions and elephants

For instance, on the planet Earth, man had always assumed that he was more intelligent than dolphins because he had achieved so much—the wheel, New York, wars and so on—whilst all the dolphins had ever done was muck about in the water having a good time. But conversely, the dolphins had always believed that they were far more intelligent than man—for precisely the same reasons.  - Douglas Adams, The Hitchhiker's Guide to the Galaxy.

Time can be divided, approximately, into time spent eating, sleeping, caring for others, playing, relaxing, making love - all the things that make up "leisure" - and time spent in activities that generate things to consume, or earnings to buy things to consume. An individual faces a trade-off between leisure and consumption, as shown in the diagram below the fold:

University retention and males

Carleton University admits more male students than females. But it graduates more female students than males. Why? What, if anything, can and should we do about it? (I don't know.)

The public access data is here. (Datacubes is a lovely tool, but it takes a little time learning how to use it.)

You can see there's a difference from the public access data. I can also get access to Carleton internal data. Except I can't seem to access it from home, so what follows comes from memory:

Is Economic Growth Really Ending?

Robert Gordon has argued in his recent NBER paper “Is U.S. Economic Growth Over? Faltering Innovation Confronts the Six Headwinds” that growth rates have slowed and we are reverting to very low historical growth rates and indeed a period of economic stagnation.  However, what I find intriguing is that an examination of some long-term data for Britain provides conflicting results that quite frankly puzzle me. 

Leviathan, Exit, Voice and Ontario Teachers

The last few weeks has seen the death of two economists – James Buchanan and Albert O. Hirschman - whose work has influenced my intellectual development and thinking over the years.    Their thoughts combined with tomorrow’s “political action” by Ontario teachers against the soon to expire McGuinty government has caused me to think about what forces are at work here.   To be human is to see patterns (I can’t remember who came up with that line but I’m sure it was not me) and the dispute with Ontario teachers can certainly be framed in my mind by the concepts of Leviathan, exit and voice.

Technology, preferences, and wages; kinks and curves, Moseley and Krugman.

Look at the red curve PF1 and the blue curve PF2 in this picture. Ignore everything else:

That's the picture Paul Krugman drew, showing how a capital-biased change in technology would shift the production function.

Production of Robots by means of Robots.

(Sorry about the title. The devil made me write it.)

What are we afraid of? Let's think about the worst-case, nightmare scenario for the distribution of income.

Assume that all capital is robots, and robots are perfect substitutes for human workers. One robot can produce everything and anything one human worker can produce. And that includes producing more robots.

And assume that every year the technology of robot production improves, so that it takes less and less time for one robot to produce another robot.

That sounds nightmarish, right? Because robots will get cheaper and cheaper, and drive down human wages?

Well, no. They won't. Or rather, it all depends. It depends on whether we add other forms of capital, or land, to the model.

Growing Ontario One Report at a Time

The Conference Board of Canada has chimed in on what ails Ontario and how to get it moving in a recently released report titled Needed: A Comprehensive Growth Strategy for Ontario. The report argues that after rebounding from the 2008-09 recession, Ontario has slipped into tepid growth of around 2 percent annually and needs a comprehensive economic growth strategy to improve its long-term growth potential. What is to be done?

Bureaucratic Entropy?

The Association of Ontario Municipalities is having its annual conference August 19-22 in Ottawa, the mother city of all governments in Canada.  Among the items on the agenda are the keynote address on:  “new secrets to leadership with five powerful tools to improve negotiation effectiveness”, a speech by Ontario’s premier (followed by the opposition leaders the day after), and concurrent sessions of how to build a better school, fiscal sustainability of infrastructure and managing municipal risk.  This is even a session called “Bring Back the Wild” which my councilors and city officials should find of interest given the recent spate of bear and alleged cougar sightings in Thunder Bay.  And of course, my personal favorite is “The Beer Store: Your Partner in Economic and Environmental Success” sponsored of course by The Beer Store. What you won’t find on the agenda is a discussion of bureaucratic entropy.

The marginal productivity of geniuses: why Apple's workers earn modest wages

Apple has recently come under fire for the low wages paid to its retail employees, the sales "specialists" and technical support "geniuses." According to a recent New York Times article, Apple is doing something "unique in the annals of retailing". It pays "a modest hourly wage, and no commission, to employees who typically have college degrees and who at the highest performing levels can move as much as $3 million in goods a year." 

Undergraduate students learn that, in a competitive market, wages are equal to the marginal value product of labour, that is, the dollar value of what the marginal worker produces. Formally, w=p*MP_L where w=the wage rate, p=the price of output and MP_L is the marginal product of labour.

Working on Claim in a Low Wage Economy

People value time - and money. There is a trade-off: to get more money, a person must spend less time on other things - child care or home repairs, making cinnamon buns or swimming in Meech Lake, playing Call of Duty or Tetris.

In the absence of income support programs, or help from family and community, people face a stark choice: work or go without. Here's a diagram that illustrates the choice, and the numbers that are behind it:

Coming Soon to a University Near You...H-Index Rankings

Most of us are familiar with the metric known as the h-Index.  Developed by Jorge Hirsch, the h-index  is a measure that says that if you have an index of h, you have published h papers each of which has been cited at least h times. 

Competition between unions

Suppose you were a believer in the benefits of canoes. You want as many Canadians as possible to own a canoe. You would presumably want to encourage competition between different canoe manufacturers, so they would compete on price and quality, so that price would be lower and/or quality would be higher, so that more Canadians would want to own a canoe.

Suppose you were a believer in the benefits of unions. You want as many Canadians as possible to belong to a union. You would presumably want to encourage competition between different unions, so they would compete on price and quality [update, to make the analogy clear: of the services unions provide to their members], so that price would be lower and/or quality would be higher, so that more Canadians would want to belong to a union.

"Does Canada have Dutch disease?" is a question without a meaningful answer

The debate about whether or not Canada has "Dutch disease" can never get very far, because there is in fact no clear notion what it is. As far as I'm concerned, the term has by now been stripped of meaning: people are using the definition that is most convenient for their purposes.

So in this post, I'm going to summarise some of the points that have been raised: