A longitudinal analysis of earnings change in Canada

Abstract.  We use tax‐based longitudinal microdata for 1982–99 to (i) examine how earnings distributions have shifted, (ii) identify changes in earnings mobility patterns, and (iii) replicate and update Beaudry and Green's cohort analysis of age‐earnings profiles. We find: (i) increased polarization of men's earnings and marked decline in real earnings of workers aged 20–4; (ii) general decline in men's earnings mobility, while women's mobility has increased for young and prime‐age workers; and (iii) upward drift in earnings profiles of 1960s–1970s entry cohorts and downward shifts for 1980s–1990s cohorts (largely confirming Beaudry and Green's findings), but suggestive of steepening profiles for the 1990s cohorts. JEL classification code : J31,O33     

Doctrine of relative purchasing power parity under fixed and flexible exchange rates reconsidered

The doctrine of relative purchasing power parity during periods of fixed and flexible exchange rates is investigated. Using cointegration techniques and data for the Group of Seven countries, a subset of the results suggests, that purchasing power parity held only between the United States and the United Kingdom over the period 1957 QI to 1973 QII. Different results are obtained for the 1973 QIII to 1990 QIV period. Based on the maximum likelihood approach of Johansen and Juselius and an error correction model, it is concluded that purchasing power parity held between the United States and Canada, the United States and France, the United States and Italy, and the United States and the United Kingdom.     

Correction to: Conservative solutions for progress: on solution types when combining QCA with in‑depth Process‑Tracing

Quality & Quantity -     

LONG‐RUN INEQUALITY AND SHORT‐RUN INSTABILITY OF MEN'S AND WOMEN'S EARNINGS IN CANADA

This paper examines the variability of workers’ earnings in Canada over the period 1982–2006. We decompose the total variance of workers’ earnings into a ‘permanent’ component between workers and a ‘transitory’ earnings instability component over time for given workers. We then investigate the statistical relationships between these components and indicators for the business cycle. The most marked change in earnings variances in Canada since 1982 is the general rise in total earnings variance, which is essentially driven by a quite dramatic rise in long‐run earnings inequality. The patterns across age categories of the two variance components are almost opposite. Long‐run earnings inequality generally rises with age, but earnings instability is seen to generally decline with age, so that earnings instability is markedly highest among entry age workers. Unemployment rate effects are positive on almost all variance measures, while higher unemployment is associated with widened long‐run earnings differentials and greater short‐run earnings instability.     

Image theory: An alternative description of audit decisions

Building upon an analysis of audit decisions by Waller & Felix (1984) [in Moriarty, S. and Joyce, E. (eds) Decision Making and Accounting: Current Research (Norman, OK: University of Oklahoma Press, 1984)], an alternative to the expected utility and “heuristics and biases” characterization of decision-making is presented. In this alternative, Image Theory, decisions are about adoption of goals and adoption of plans for attaining the goals, as well as about whether the plans are succeeding. The audit process is interpreted in terms of Image Theory and the salient research issues that this interpretation suggests are examined.     

Code of ethics: The professional catch 22

In October of 1981, a jury in Ohio found an accountant guilty of negligence and breach of contract for violating the obligation of confidentiality mandated in the accountant's code of ethics and awarded the plaintiffs approximately $1,000,000. At approximately the same time, a jury in New York awarded a plaintiff in excess of $80,000,000 based in part on the failure of an accountant to disclose confidential information.     

Immigrant earnings differentials in Canada: A more general specification of age and experience effects

This paper investigates empirically the role of age and arrival cohort effects on immigrant earnings differentials. The dataset used consists of a sample of 5,069 adult Canadian male employees from the 1973 Job Mobility Survey, a non-census dataset that provides information on actual work experience, language attributes, and numerous parental family background characteristics. It thus allows a more general specification of foreign-born/native-born earnings differentials, particularly the effects of age, work experience and years since immigration. The results confirm the importance of cross-sectional age cohort effects and refine previous findings on arrival cohort effects. Sample selectivity bias is investigated and found to be significant only when respondent's occupation is not controlled for. Adjustment for sample selection bias leaves essentially unchanged the main findings.For their helpful comments on an earlier version of this paper presented at a Labour Economics Conference at The University of Western Ontario, the authors would like to thank Martin Dooley, John Vanderkamp, Hank Farber, David Card and John Abowd. The authors also gratefully acknowledge the useful comments offered by members of the Labor Economics/Institute for Research on Poverty Workshop at the University of Wisconsin-Madison and an anonymous referee. The authors, of course, retain full responsibility for all remaining errors and shortcomings. The first version of this paper was written while the second author was visiting the Industrial Relations Section at Princeton University and the Institute for Research on Poverty at the University of Wisconsin-Madison.     

Farm Economics of Bird Flu

Outbreaks of infectious animal diseases represent a major threat to agriculture and can impose significant social and economic costs. The potential for devastating epidemics, such as the recent outbreaks of highly pathogenic avian influenza (HPAI) in Asia, Europe, and Africa, has prompted major global investments in animal disease prevention and control, both public and private. However, there has been little research into the effects of alternative public policies on farm‐level actions to prevent and control HPAI and the implications for disease impacts. Animal disease management involves both ex ante investments to reduce the probability of infection and ex post actions to contain the spread of disease once introduced. The public sector can play an important part in disease mitigation through provision of public disease prevention and control. Another vital role for government in mitigating the potential impacts of HPAI is in the development of well‐designed policies to induce socially optimal ex ante private investment while providing incentives for truthful disclosure of disease status. This study employs an economic epidemiology framework to examine the effects of farmer behavior on disease introduction and transmission and to analyze the effects of public policy decisions under alternative scenarios. Les éclosions de maladies animales infectieuses représentent une menace importante pour l’agriculture et peuvent entraîner des coûts socio‐économiques considérables. L’éventualité d’épidémies dévastatrices, telles que les récentes flambées d’influenza aviaire hautement pathogène (IAHP) en Asie, en Europe et en Afrique, a suscité d’importants investissements publics et privés à l’échelle mondiale pour prévenir et lutter contre ces maladies. Cependant, peu de recherches se sont penchées sur les effets des politiques publiques de rechange sur les mesures prises à la ferme pour prévenir et lutter contre l’IAHP et les répercussions des maladies. La gestion des maladies animales nécessite des investissements ex ante pour diminuer la probabilité d’infection et des mesures ex poste pour contenir la propagation d’une maladie une fois introduite. Le secteur public peut jouer un rôle important dans l’atténuation d’une maladie en instaurant des programmes publics de prévention et de lutte. Pour atténuer les conséquences potentielles de l’IAHP, le gouvernement peut élaborer des politiques efficaces pour inciter des investissements privés ex ante socialement optimaux tout en offrant des stimulants pour encourager la divulgation véridique de la situation zoosanitaire. Dans la présente étude, nous avons utilisé un cadre épidémiologique et économique pour examiner les conséquences du comportement de l’exploitant agricole sur l’introduction et la transmission des maladies et pour analyser les conséquences des décisions de politique publique selon divers scénarios.     

Productivity in the Global Value Chain World

This article is adapted from the 2019: William S. Vickrey Distinguished Address I was invited to deliver at the International Atlantic Economic Conference in Miami, October 19, 2019. It explores three significant and interconnected global factors that are projected to shape the future of labor and productivity. Among these three identified factors are the emergence of enhanced labor hours through the development of artificial intelligence, the restructuring of population demographics and labor forces, and the integration of global value chains. The individual and interconnected effects of these three factors are illustrated through the use of artificially intelligent “autocoders” in the Office of Safety, Health, and Working Conditions at the Bureau of Labor Statistics, current and projected demographic shifts in the Japanese labor force, and the impact of global value chain production in the Chinese automobile industry. Although the long-run impact of these global trends is unknown, it is evident that as a general rule and in the aggregate, national economies will find opportunities to increase productivity as they embrace enhanced labor in the workplace and integrate global networks of value creation that span borders and industries.