Worthwhile Canadian Initiative

L'affaire Potter

You are all, I think, familiar with the details of L'Affaire Potter, so I need not enumerate them here. If you aren't already familiar with this story, you probably don't care what I have to say about it, so you can skip the rest of this post. But as a Quebec-based academic with a weekly column in a national newspaper, I feel obliged to say something.

Internal migration flows in Canada

Discussions about demographics are typically focused on trends in fertility/morbidity and immigration/emigration, and these are what matter at the national level. But at the local level, trends on internal migration are also important. Statistics Canada has been publishing data on inter-provincial migration for years, but there's only so much you can get out of them. Migration trends within large provinces such as Ontario and Quebec may be more important for local service providers than inter-provincial trends.

Happily, Statistics Canada started publishing data on migration flows between Census Metropolitan Areas (CMAs) and between non-CMA regions in its Cansim Table 051-0065. It's still not as good as the county-to-county migration flows data published by the US Census Bureau, but it's a start. Moreover, the series begin in 2011, so there's a limit to the information you can extract from them.

That said, my first pass at what we can learn from these internal migration data is below the fold.

Project Link: Piecing together recent Canadian economic history

I've already ranted a couple of times - here and here - about Statistics Canada's 'Attention Deficit Disorder': its habit of starting new time series using new methodologies without updating the historical data. As I put it in my first rant,

Statistics Canada must be the only statistical agency in the world where the average length of a data series gets shorter with the passage of time. Its habit of killing off time series, replacing them with new, 'improved' definitions and not revising the old numbers is a continual source of frustration to Canadian macroeconomists.

But of course ranting about the problem isn't the same thing as solving it. I kept thinking of this old Peanuts cartoon:

So I decided to light a candle.

The economics of SSHRC research grants IV: A collective action problem

As irritating as it was, SSHRC's infatuation with Research in Buzzword Studies is not why Insight Grant (IG) success rates have stayed so low, even as the budget envelope has increased. The problem is the hard-won budgetary rigour that was established during the last years of the old Standard Research Grant (SRG) program disappeared when the IG was introduced.

The economics of SSHRC research grants III: Research in Buzzword Studies

When SSHRC replaced the old Standard Research Grant (SRG) program with the Insight Grant (IG) program, it did more than simply increase the budget for research grants. It also introduced "priority research areas" (see Frances on this here) that would receive special attention. It turned out that the amounts allocated to these new research areas would account for all of that grant increase, and more.

The economics of SSHRC research grants II: Cutting and restoring budgets

In the first post of this series, I noted that much of the reduction in SSHRC research grant success rates during the transition from the old 3-year Standard Research Grants (SRG) to the new 5-year Insight Grants (IG) could be explained by the stock-flow dynamics of changing grant durations. But that's not the whole story: success rates also depend on the total funding envelope.

Here is the history of success rates (projects funded as a percentage of applications) and funding rates (total research funds awarded as a percentage of total requested) for the entire SRG program:

The economics of SSHRC research grants I: Why are success rates so low?

I've participated a few times in the adjudication process for the Social Sciences and Humanities Research Council (SSHRC) research grant programs: twice as a reviewer, and three times as chair. (Chairs have to be bilingual, so Quebec profs are often called up to serve as chair.) Regular WCI readers - and of course researchers in humanities  and social sciences - will recall that SSHRC reorganised the way it runs research grants: see Frances' post here and Livio's here.

I've long been interested in the mechanics of how SSHRC allocates research funds, and I was curious to see how things had changed during the transition from the old Standard Research Grant (SRG) program to the new Insight Grant (IG) program. So when I was invited to serve again as chair for the economics committee chair for the 2014-15 exercise, I was happy to accept. That was more than a year ago, but I finally got around to writing something down about it.

Bargaining power and the incidence of taxes on high earners in Canada

Today I'm presenting a paper at the meetings of the Canadian Economics Association: "Bargaining power and the incidence of taxes on high earners in Canada." The bottom line is that once you take into account the fact that high earners have bargaining power - that's why they are high earners in the first place! - then it's by no means clear that increasing the top marginal personal income tax rate will result in a progressive redistribution of after-tax income.

This is a theme I've been pursuing for years. From a post I wrote in November of 2009:

How much revenue will the Liberals generate with a new tax bracket on high earners?

[I started writing this post in May, but I stopped when it looked like the Liberals were not going to be in a position to implement this measure. Happily, I didn't actually delete it.]

[An earlier version made a stupid mistake; I did everything under tha assumption that the increase was 3 percentage points, and not 4. Gah.] 

The Liberal Party of Canada is proposing to increase the federal tax rate on taxable income above $200,000 from the current rate of 29% to 33%. According to the LPC, this measure will generate $3b in revenues:

Labour market flows revisited

It's been a while since I've looked at patterns in gross labour market flows; the last time was here. The basic methodology is taken from Stephen Tapp's  CJE article, in which he extracts labour market transitions from the Labour Force Survey Public Use Microdata Files. Not all transitions are covered by the LFS questionnaire, but we can get recover some of them:

1. Hires: People who are employed, and who have been at their current job for one month or less.
2. Layoffs: People who have been unemployed for 4 weeks or less, and who were laid off from their previous job.
3. Leavers: People who have been unemployed for 4 weeks or less, and who left their previous job of their own accord.

Ottawa as Robin Hood

As the eurozone bumps along from major crisis to minor crisis to existential crisis, the point is often made that a key feature of successful monetary unions that is missing in the eurozone is a system of transfers. These transfers act a sort of compensation for renouncing the option of pursuing an independent monetary policy.

Another rant about Statistics Canada's Attention Deficit Disorder

I've done this before, but I've had a very bad day and I need to vent.

I've started work on a forecasting project for the Canadian data, focusing on the short- and medium-term outlook. The first task is to see what sort of data are available, and once again, the frustrating answer is 'not near enough.' Statistics Canada's habit of starting new data definitions and not revising the historical series makes it extremely difficult to get a handle on what's actually happening to the Canadian economy.

Doug Saunders has written a dreadful column about the "resource curse", and I'm going to explain why it's dreadful

This column by Doug Saunders on the "resource curse" in last Saturday's Globe and Mail is quite dreadful:

When the price of oil is the foundation of your country’s economy, a sudden plunge to half its value focuses the mind wonderfully, doesn’t it?

One's heart sinks at the very first sentence: the premise is wildy at odds with the facts and can lead to nothing useful.

A short history of the Canadian one per cent

Any sensible policy designed to address the concentration of income at the top of the Canadian income distribution over the past thirty years or so has to be based on a working model that explains how and why it happened in the first place. And we still don't have one. We still don't even have a good handle on the basic facts that this model should explain.

I think that one basic fact that such a model should explain is how the composition of the top earners group has evolved over time. So I'm going to present here some numbers from the Public Use Microdata Files for the censuses between 1981 and 2006.

The manufacturing trap

Oil prices are down lately, and over at the Broadbent Institute, Andrew Jackson is worried about the staples trap:

The great tuition debate: A rejoinder

This is a response to this, which is in turn a response to this and this, which was a response to this, which was a comment on this old E-Lab post of mine. This is old, well-covered ground, so I'll be as brief as I may.

How big has the effect of increases in the minimum wage been on youth employment?

One of the more puzzling features of the Canadian labour market in the last few years recovery has been the stubborn refusal of youth employment rates to recover from the recession:

There may a relatively simple (partial) explanation. This is taken from a recent Statistics Canada study on trends in the minimum wage:

There seems to be a broad consensus around "small increases in the minimum wage will have small effects on employment", but this is not a small increase: the CPI-corrected Canadian minimum wage increased by 12.9% between 2008 and 2013. So in this post I'm going to try to put together some back-of-envelope numbers about what sort of effect this increase has had on youth employment.

The counterfactual I'm going to consider is: What would have happened to youth employment if Canadian real minimum wages had simply increased in line with the CPI since 2008? That is to say: what were the effects of that extra increase of 0.1215 ( = log[1.1292]) in the log of the minimum wage between 2008 and 2013?

Action bias and the political economy of penalty kicks

Most penalty kicks result in a goal; this is why soccer players go to such comical lengths to draw a penalty. The distance between the ball and the goal is so short that goaltenders don't have time to react; they have to commit to a strategy as the ball is being kicked. The usual strategy is to try and guess where the ball will be kicked and to jump in that direction. Surprisingly enough, the tactic of not jumping - that is, guessing that the ball will be kicked down the middle - is under-utilised.

An interesting study from a group of Israeli researchers (Bar-Eli et al, 2007) offers a plausible explanation: 'action bias'. 

The Economist on WCI

The Economist has a story on the state of the Canadian economy and it features an appearance by Livio Di Matteo:

Yet luck played a large, unacknowledged part, says Livio Di Matteo, an academic and contributor to Worthwhile Canadian Initiative, the world’s best-named economics blog.

It's official: WCI is now the best-named economic blog. Take that, Marginal Revolution!

Statistics Canada's Attention Deficit Disorder

This happens all the time:

With the release of November 2013 data, Statistics Canada converted the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) series to 2010=100, with 2010 as the base year. These indexes have also been updated using a weighting pattern based on the 2010 production values of Canadian manufacturers.

At the same time, the classification system was converted to the North American Product Classification System (NAPCS) developed by Canada, the United States and Mexico.

What this self-congratulatory blurb doesn't mention is that Statistics Canada has replaced an IPPI that went back to 1956 with one that goes back to 2010. I can't think of any interesting question that can be answered with a price index that starts in 2010.