Decomposing changes in wage distributions: a unified approach

Over the last fifteen years, many researchers have attempted to explain the determinants and changes of wage inequality. I propose a simple procedure to decompose changes in the distribution of wages or in other distributions into three factors: changes in regression coefficients; the distribution of covariates, and residuals. The procedure requires only estimating standard OLS regressions augmented by a logit or probit model. It can be extended by modelling residuals as a function of unmeasured skills and skill prices. Two empirical examples showing how the procedure works in practice are considered. In the first example, sources of differences in the wage distribution in Alberta and British Columbia are considered; in the second, sources of change in overall wage inequality in the United States, 1973–99, are re–examined. Finally, the proposed procedure is compared with existing procedures. JEL classification: J3 La décomposition des changements dans les distributions de salaires : une approche unifée. Au cours des quinze dernières années, nombre d’études se sont penchées sur les déterminants et les changements de la distribution des salaires. Ce mémoire propose une procédure pour décomposer les changements de la distribution des salaires en trois éléments: les changements dans les coefficients de régression, la distribution des regresseurs et les changements résiduels. Cette procédure ne nécessite que l’estimation de regressions par moindre carrés ordinaires et d’un modèle probit ou logit. L’auteur montre aussi comment modéliser les résidus en fonction de compétences non mesurées. La procédure proposée est mise en application dans le contexte de deux exemples: la distribution des salaires en Alberta et en Colombie–Britannique et les changements dans la distribution des salaires de 1973 à 1999 aux Etats–Unis. Le mémoire examine aussi comment cette procédure se compare aux méthodes proposées par d’autres chercheurs.     

The roles of alternative data and machine learning in fintech lending: Evidence from the LendingClub consumer platform

There have been concerns about the use of alternative data sources by fintech lenders. We compare loans made by LendingClub and similar loans that were originated by banks. The correlations between the rating grades (assigned by LendingClub) and the borrowers’ FICO scores declined from about 80% (for loans originated in 2007) to about 35% for recent vintages (originated in 2014–2015), indicating that nontraditional data (not already accounted for in the FICO scores) have been increasingly used by fintech lenders. The rating grades perform well in predicting loan default. The use of alternative data has allowed some borrowers who would have been classified as subprime by traditional criteria to be slotted into “better” loan grades, allowing them to obtain lower priced credit.     

The Effect of Credit Risk on Bank and Bank Holding Company Bond Yields: Evidence from the Post-FDICIA Period

In this article we examine whether the federal safety net is viewed by the market as being extended beyond de jure deposits to other bank debt and even the debt of bank holding companies (BHCs). We extend previous research by focusing on the post‐FDICIA period and by examining the risk‐return relation of bonds issued directly by banks, not BHCs. Our results provide evidence that both bank and BHC bonds are priced by the secondary market in relation to their underlying credit risk, particularly for less capitalized issuers, suggesting that proposals requiring banks to issue subordinated debt may enhance market monitoring and discipline and be useful in supplementing regulatory discipline.     

Regression discontinuity designs: A guide to practice

In regression discontinuity (RD) designs for evaluating causal effects of interventions, assignment to a treatment is determined at least partly by the value of an observed covariate lying on either side of a fixed threshold. These designs were first introduced in the evaluation literature by Thistlewaite and Campbell [1960. Regression-discontinuity analysis: an alternative to the ex-post Facto experiment. Journal of Educational Psychology 51, 309–317] With the exception of a few unpublished theoretical papers, these methods did not attract much attention in the economics literature until recently. Starting in the late 1990s, there has been a large number of studies in economics applying and extending RD methods. In this paper we review some of the practical and theoretical issues in implementation of RD methods.     

New unions in the UK: the vanguard or the rearguard of the union movement?

Between January 1999 and March 2010, 34 trade unions entered the Certification Officer list or schedule in the UK. This article reports on a survey of those unions, discussing the extent to which they represent new forms of unionism and the possible implications for union revitalisation.     

Changes in wage inequality in Canada: An interprovincial perspective

This paper uses the Canadian Labour Force Survey to understand why the level and dispersion of wages have evolved differently across provinces from 1997 to 2013. The faster increase in the level of wages and the decline in wage dispersion in Newfoundland, Saskatchewan and Alberta are the starkest interprovincial differences. We find that they are accounted for by the growth in the extractive resources sectors, which benefited less‐educated and younger workers the most. Increases in minimum wages since 2005 are found to be the main reason why wages at the very bottom grew more than those in the middle of the distribution.     

Incentive effects of social assistance: A regression discontinuity approach

Before 1989, childless social assistance recipients in Quebec under age 30 received much lower benefits than recipients over age 30. We use this sharp discontinuity in policy to estimate the effects of social assistance on various labour market outcomes using a regression discontinuity approach. We find strong evidence that more generous social assistance benefits reduce employment. The estimates exhibit little sensitivity to the degree of flexibility in the specification, and perform very well when we control for unobserved heterogeneity using a first difference specification. Finally, we show that commonly used difference-in-differences estimators may perform poorly with inappropriately chosen control groups.     

Identifying and evaluating adaptation strategies for cruise tourism in Arctic Canada

The cruise tourism industry in Arctic Canada has recently grown rapidly with stable numbers now emerging. While there are many socio-economic opportunities associated with growth, climate change, and environmental, technical and cultural risks also present significant management challenges. To enhance understanding of these opportunities and risks, this study adopted a policy Delphi approach to identify and evaluate potential adaptation strategies to aid decision-makers and policy-makers managing cruise tourism development and its associated impacts. Over 500 ideas were identified. These were distilled down to 65 potential adaptation options, which were evaluated for priority and feasibility by key stakeholders including local residents, tourism operators, and policy-makers. The majority of recommendations were evaluated as of high priority and most options were perceived to be somewhat affordable and implementable. Key needs included disaster management plans, updated technology and ship navigation systems, improved marine resource mapping, and the development of a code of conduct for cruise tourists to guide visitor behaviour and promote a sustainable approach. The research represents the first empirical study to identify and evaluate adaptation strategies for cruise tourism development in Arctic Canada and outlines current priorities, opportunities, and challenges associated with managing socio-economic change in Arctic Canada in sustainable ways.     

Unions and wage inequality: The roles of gender,skill and public sector employment

We examine the changing relationship between unionization and wage inequality in Canada and the United States. Our study is motivated by profound recent changes in the composition of the unionized workforce. Historically, union jobs were concentrated among low-skilled men in private sector industries. With the steady decline in private sector unionization and rising influence in the public sector, half of unionized workers are now in the public sector. Accompanying these changes was a remarkable rise in the share of women among unionized workers. Currently, approximately half of unionized employees in North America are women. While early studies of unions and inequality focused on males, recent studies find that unions reduce wage inequality among men but not among women. In both countries, we find striking differences between the private and public sectors in the effects of unionization on wage inequality. At present, unions reduce economy-wide wage inequality by less than 10%. However, union impacts on wage inequality are much larger in the public sector. Once we disaggregate by sector, the effects of unions on male and female wage inequality no longer differ. The key differences in union impacts are between the public and private sectors—not between males and females.