Worthwhile Canadian Initiative

Earnings in the "Good Old Days"

The last two times I’ve taught my quantitative economic history course, I have assigned a micro-data collection project based on the 1901 Census of Canada.   All in all, this data collection was a good experience for the students given they got some direct experience collecting primary data, coding it and then analyzing it.  Moreover, I now have a small data set of household heads from the 1901 Census with data on age and total earnings.  The 1901 Census asked what the earnings were from an occupation or trade as well as any extra earnings from other than the chief occupation or trade.  As a result, I have been able to construct age-earnings profiles that unlike modern ones show rather steep declines in earnings after the mid-forties.  Modern profiles show relatively moderate declines after age 50.

Minimum Wages as Macroeconomic Stimulus?

The minimum wage debate has heated up in Ontario given the Ontario Ministry of Labor’s Minimum Wage Advisory Panel is travelling the province looking for input on how to adjust the minimum wage in the province and sparking debate as to whether the minimum wage should be raised from the current general minimum of $10.25 per hour to $14.00.  Yesterday, there were student demonstrations in Ontario and the one in Thunder Bay generated a news story that bumping the minimum wage to $14 an hour would inject 5.1 billion dollars into the economy. 

Shifting Populations, Shifting Economies

Statistics Canada just released its total population estimates for 2013 and the picture shows declining shares of population not just for Quebec and the Atlantic region, but also for parts of the west.  While the population share of the western provinces has grown over the period 1983 to 2013, this increase is due to Alberta and British Columbia.  The population shares of Manitoba and Saskatchewan have also declined.

Real wages and old-time macroeconomics

I posted this graph at Maclean's earlier today:

The hook of the piece was that Canadian real wages had increased in Canada, and I made the point that this increase was largely due to the Bank of Canada's undershooting its inflation target. 

I went to the FRED site and put together a similar graph, using two wage measures that seemed fairly broad:

 

This looks a lot like what the macro I used to teach 20 years ago would have predicted: the goal of monetary policy in times like these is to engineer an economy-wide wage cut, be it by increasing the price level, depreciating the currency, or both. Labour demand curves slope down.

 

What is the link between unionisation and inequality?

I've looked at graphs like this many times over the past few years:

One of the things that I notice in that chart is that countries that are reputed to have strong union movements have market inequality outcomes that don't appear to be all that much better than those with weaker union movements.

So this post offers some cross-country evidence about the empirical link between unionisation and inequality. All data are taken from the OECD. The inequality measure is the Gini coefficient, which means that this post has nothing to say about 'top end' income concentration. (See here for why I think the distinction is important.)

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.