J31 - Wage Level and Structure; Wage Differentials

• Are Working Hours Complements in Production?

  Staff Working Paper 2022-47 Lin Shao, Faisal Sohail, Emircan Yurdagul

  Using Canadian matched employer-employee data, we show that working hours of different workers are gross complements in production rather than perfect substitutes, as is typically assumed by macroeconomic models of production.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Labour markets JEL Code(s): E, E2, E23, J, J2, J22, J23, J3, J31

• Has wage setting changed in Canada? Evidence from the pre-pandemic 2020 Wage-Setting Survey

  Staff Analytical Note 2022-10 David Amirault, Sarah Miller, Matthieu Verstraete

  Just before the pandemic began, the Bank of Canada conducted the 2020 Wage-Setting Survey. The goal was to explore the unusual trend of subdued wage growth in 2018 and 2019 despite a tightening in the labour market. Although this wage puzzle was beginning to resolve at the time of the survey, results highlight changes in several factors that may have important impacts on wage dynamics.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Central bank research, Labour markets JEL Code(s): J, J3, J31, J32, J33, J6, J63

• Income Inequality in Canada

  Staff Discussion Paper 2022-16 Sarah Burkinshaw, Yaz Terajima, Carolyn A. Wilkins

  Data show that income inequality in Canada increased substantially during the 1980s and first half of the 1990s but has been relatively stable over the past 25 years. This increase was felt mainly by low-income earners and younger people, while older people benefited from higher retirement income.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Labour markets, Monetary and financial indicators JEL Code(s): D, D3, D31, D6, D63, I, I2, I24, I3, I32, J, J3, J31, J32, N, N3, N32

• Contribution of Human Capital Accumulation to Canadian Economic Growth

  Staff Discussion Paper 2022-7 Audra Bowlus, Youngmin Park, Chris Robinson

  This paper quantifies the contribution of human capital accumulation to the growth of real gross domestic product (GDP) in Canada.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Econometric and statistical methods, Labour markets, Potential output, Productivity JEL Code(s): D, D2, D24, E, E2, E24, J, J2, J24, J3, J31, O, O4, O47

• Four Decades of Canadian Earnings Inequality and Dynamics Across Workers and Firms

  Staff Working Paper 2021-20 Audra Bowlus, Émilien Gouin-Bonenfant, Huju Liu, Lance Lochner, Youngmin Park

  We use four decades of Canadian matched employer-employee data to explore how inequality and the dynamics of individual earnings have evolved over time in Canada. We also examine how the earnings growth of individuals is related to the growth of their employers.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Firm dynamics, Labour markets, Potential output, Productivity JEL Code(s): D, D2, D22, D3, D31, E, E2, E24, J, J2, J24, J3, J31, J6, J63

• Towards a HANK Model for Canada: Estimating a Canadian Income Process

  Staff Discussion Paper 2020-13 Iskander Karibzhanov

  How might one simulate a million realistic income paths and compute their statistical moments in under a second? Using CUDA-based methods to estimate the Canadian earnings process, I find that the distribution of labour income growth is sharply peaked with heavy tails—similar to that in the United States.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Economic models, Labour markets JEL Code(s): D, D3, D31, E, E2, E24, J, J3, J31

• Optimal Taxation in Asset Markets with Adverse Selection

  Staff Working Paper 2020-11 Mohammad Davoodalhosseini

  What is the optimal tax schedule in over-the-counter markets, e.g., those for corporate bonds? I find that an optimal tax schedule is often non-monotonic. For example, trading of some high-price assets should be subsidized, and trading of some low-price assets should be taxed.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial markets, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D8, D82, D83, E, E2, E24, G, G1, G10, J, J3, J31, J6, J64

• Local Labor Markets in Canada and the United States

  Staff Working Paper 2019-12 David Albouy, Alex Chernoff, Chandler Lutz, Casey Warman

  We examine local labor markets in the United States and Canada from 1990 to 2011 using comparable household and business data. Wage levels and inequality rise with city population in both countries, albeit less in Canada.

  Content Type(s): Staff research, Staff working papers Topic(s): Labour markets JEL Code(s): J, J2, J21, J3, J31, J6, J61, N, N3, N32, R, R1, R12

• Wage Dynamics and Returns to Unobserved Skill

  Staff Working Paper 2017-61 Lance Lochner, Youngmin Park, Youngki Shin

  Economists disagree about the factors driving the substantial increase in residual wage inequality in the U.S. over the past few decades. We identify and estimate a general model of log wage residuals that incorporates: (i) changing returns to unobserved skills, (ii) a changing distribution of unobserved skills, and (iii) changing volatility in wages due to factors unrelated to skills.

  Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Labour markets JEL Code(s): C, C2, C23, J, J2, J24, J3, J31

• Constrained Efficiency with Adverse Selection and Directed Search

  Staff Working Paper 2017-15 Mohammad Davoodalhosseini

  Constrained efficient allocation (CE) is characterized in a model of adverse selection and directed search (Guerrieri, Shimer, and Wright (2010)). CE is defined to be the allocation that maximizes welfare, the ex-ante utility of all agents, subject to the frictions of the environment.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Financial markets, Financial system regulation and policies, Market structure and pricing JEL Code(s): D, D8, D82, D83, E, E2, E24, G, G1, J, J3, J31, J6, J64