Category: incomes and wages

Three enhancements to Employment Insurance to reduce income inequality, promote income security, and support families

~ MilesCorak ~ 5 Comments

Social policy in Canada faces three challenges having to do with income inequality, income insecurity, and the imbalance between work and family life. My presentation at the Queen’s University conference, “Social Canada Revisited,” begins by outlining three facts that illustrate these challenges:

  1. The share of total market income going to bottom-income Canadians has fallen
  2. Workers with steady employment suffer significant and long-lasting income losses after a layoff
  3. Families have changed to help cushion and support middle incomes, but the family-work balance is titled

I suggest that there are precedents in the existing Employment Insurance program that can be enhanced and built upon to more fully offer Canadians the social insurance they need and want, and put forward three enhancements that will move social policy in this direction.

  1. Enhance Working While on Claim and integrate it seamlessly with the Working Income Tax Benefit to offer steady and increased income support to lower-income Canadians in a way that mimics some versions of a Basic Income
  2. Introduce wage insurance that would top up weekly earnings for workers with a steady employment history who have suffered a permanent layoff
  3. Expand so-called “Special Benefits” by creating individual accounts over which individuals have complete sovereignty

Download a copy of my presentation for the details.

Changing income inequality, some Canada – US differences

~ MilesCorak ~ Leave a comment

One of the responsibilities of being President of the Canadian Economics Association is organizing the conference program; but one of the honours is giving the “Presidential Address” to the entire assembly of the next year’s conference. This year’s address is by Charles Beach of Queen’s University who spoke on “Changing income inequality: A distributional paradigm for Canada.”

This is a particularly special meeting to give the Presidential Address, as it is the association’s 50th anniversary with a record attendance of over 1,200.

Beach’s objective is to pull together a whole host of facts, and offer a framing that can drive a consistent narrative, and in this way to understand underlying drivers of inequality in Canada and guidance for policy. Beach also points out that there are significant differences between Canada and the United States.

There has been a decline in the share of income going to families in the middle over the last 30 years, and there has been a corresponding increase in the share going to the top 10%. Interestingly the share going to the bottom 20% has not changed so much, a big difference from the United States. Median family incomes have also been slightly increasing in Canada, another big difference between these two countries. The other big cross-country difference is that while top 1% shares have gone up in both countries, the rise is bigger in the United States.

It is also true that the returns to education have risen in both countries, but again more so in the United States. Several things could be driving this: immigration policy in the US is more focused on low skilled workers than in Canada where the focus is somewhat more on high skill immigrants; Canada has experienced a boom in the resource and housing sectors that disproportionately employ lower skilled workers, and unionization rates are higher; there was also a big inflow of highly educated women entering in the labour force in both countries, but more so in Canada. All these factors have had the tendency to blunt earnings growth at the top in Canada, and support it somewhat at the bottom, but perhaps done the opposite in the United States.

Typical workers have been benefiting less from overall output gains, but again the patterns differ between the two countries. Labour income as a proportion of GDP has hovered between 50 and 55% in Canada since 1960, but in the United States drifted from about that in the 1960s to below 45% by 2010.

Earnings inequality at the top has slowed progress in pay equity between men and women

~ MilesCorak ~ Leave a comment

Nicole Fortin, a professor of economics with the University of British Columbia, addressed the 50th anniversary meeting of the Canadian Economics Association with a “state of the art” presentation on earnings inequality in top incomes and the gender pay gap, examining three questions:

  1. What are the consequences of under representation of women in top incomes to the overall pay gap?
  2. How is it contributing to the slowdown in the convergence of male and female wages?
  3. What could be done to change things?

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The winners and losers of globalization, Branko Milanovic’s new book on inequality answers two important questions

~ MilesCorak ~ 9 Comments

Branko Milanovic Global Inequality Harvard University Press Cover Image

Branko Milanovic begins his book, Global Inequality, by posing a question: “Who has gained from globalization?” Many thoughtful Americans have the confidence to answer in a sentence. The gains have been captured by the top 1 percent. And the book ends with another question: “Will inequality disappear as globalization continues?” Many might be just as quick to answer: Of course not, the rich will get richer!

But life is not so simple. Between these two questions Branko Milanovic offers us not just a plethora of facts about income inequality that will surely make his readers think twice. More importantly, he shows us the power of bringing the facts into focus by putting a new lens over these pressing issues—a global perspective. He takes more than 200 pages to answer the first question, and only a sentence to answer the second.

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Long live the mandatory census! or maybe not?

~ MilesCorak ~ 1 Comment

[This post is based on my comments at “Celebrating the Census,”  a panel discussion organized by the McGill University Centre on Population Dynamics held in Montreal on April 29th, 2016. Other members of the panel were Jean-Yves Duclos, Sebastien Breau, Ian Culbert, Ariane Krol, Mary Jo Hoeksema, and the moderator Celine LeBourdais.]

The Census is built block-face by block-face. It is built sub-division by sub-division. Village, township, city, municipality, it is built until the entire country is perfectly and completely tiled.

The Census is a machine, complicated and intricate. And the public servants working at Statistics Canada should be rightly proud of the hard work and dedication devoted to the development, maintenance, and management of this machine. Even the most jaundiced among us, regardless of political persuasion, should recognize and acknowledge this accomplishment.

RH Coast looking north over Jean Talon S0001
The Jean Talon building, in the bottom right, was originally called the “Census Building.” Photograph by Philip Smith.

The value of this machine is that it lets us see ourselves in detail more precise than any other mirror, and the return of a mandatory long form, in which Canadians are required to offer up a description of some of the most private aspects of their lives, is hailed by many as a major turn in public policy that will allow this picture to stay clearly focused.

But the Census is more than a machine. Jean Talon knew that. The very first Census he conducted, beginning in the later part of 1666, was clearly an act of nation building. He used it to help him, and France, develop and build a viable colony extending from the shores of the Saint Lawrence River, transforming the countryside into a prosperous agricultural region that would prepare the way for waves and waves of more immigrants. The Census is an act of political imagination.

And the public servants who work at Statistics Canada are not well placed to exercise that imagination, even if at times what they do in managing the machine casts them in that role.

There is still much to be done for Canadians to accept and appreciate the benefits of the Census, and for the federal government to give them ownership of the results. The Census is mandatory—by law it must be filled out—but we should strive to think of it as voluntary, our participation to be both exercised and celebrated as an act of citizenship in a way that fosters each Canadian’s political imagination.

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Inequality: a fact, an interpretation, and a policy recommendation

~ MilesCorak ~ 4 Comments

Tackling inequality and poverty aren’t mutually exclusive; rather, efforts devoted to fighting the former contribute to solving the latter.

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