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Abstract:
Several recent studies have found that earnings inequality in Canada has grown considerably since the late 1970's. Using an extraordinary data base drawn from longitudinal income tax records, we decompose this growth in earnings inequality into its persistent and transitory components. We find that the growth in earnings inequality reflects both an increase in long-run inequality and an increase in earnings instability. The large size of our earnings panel allows us to estimate and test richer models of earnings dynamics than could be supported by the relatively small panel surveys used in U.S. research. The Canadian data strongly reject several restrictions commonly imposed in the U.S. literature, and they also suggest that imposing these evidently false restrictions may lead to distorted inferences about earnings dynamics and inequality trends.

Abstract:
Several recent studies have found that earnings inequality in Canada has grown considerably since the late 1970's. Using an extraordinary data base drawn from longitudinal income tax records, we decompose this growth in earnings inequality into its persistent and transitory components. We find that the growth in earnings inequality reflects both an increase in long-run inequality and an increase in earnings instability. Our large sample size enables us to estimate and test richer models than could be supported by the relatively small panel surveys used in most previous research on earnings dynamics. For example, we are able to incorporate both heterogeneous earnings growth and a random-walk process in the same model, and we find that both are empirically significant.

Abstract:
I examine the effects of the introduction of the Spouse's Allowance to the Canadian Income Security (IS) system on the retirement behavior of couples. This program was effectively targeted at females in couples attempting to live on a single pension. It allowed qualifying spouses to receive the age related benefits of the IS system at age 60, up to five years earlier than other members of the population. This policy intervention provides an excellent opportunity to investigate how income security programs affect the timing of retirement, and how programs targeted at one spouse can affect the behavior of the other. The results indicate that the introduction of the Allowance is associated with a relative increase in the labor force rates of 6 to 7 percentage points among males in eligible couples. Eligible females did not share the rising employment rates over the 1970s experienced by their counterparts (of the same age) who were not eligible for the Spouse's Allowance.

Abstract:
I examine the effects of the introduction of the Spouse's Allowance to the Canadian Income Security system on the retirement behaviour of couples. This policy intervention provides an excellent opportunity to investigate how income security programs affect the timing of retirement. The structure of the Allowance also provides a view of how programs targeted at one spouse can affect the behaviour of the other. Finally, conditional of the types of data available for this time period, the analysis considers the joint labour market decisions of couples. The results indicate that the introduction of the Allowance is associated with decreased employment rates and increased not in the labour force rates among eligible males. Eligible females did not share the rising employment rates over the 1970s experienced by their counterparts who were not eligible for the Spouse's Allowance.

Abstract:
The growing labor force participation of women with small children in both the U.S. and Canada has led to calls for increased public financing for childcare. The optimality of public financing depends on a host of factors, such as the "crowd-out" of existing childcare arrangements, the impact on female labor supply, and the effects on child well-being. The introduction of universal, highly-subsidized childcare in Quebec in the late 1990s provides an opportunity to address these issues. We carefully analyze the impacts of Quebec's "$5 per day childcare" program on childcare utilization, labor supply, and child (and parent) outcomes in two parent families. We find strong evidence of a shift into new childcare use, although approximately one third of the newly reported use appears to come from women who previously worked and had informal arrangements. The labor supply impact is highly significant, and our measured elasticity of 0.236 is slightly smaller than previous credible estimates. Finally, we uncover striking evidence that children are worse off in a variety of behavioral and health dimensions, ranging from aggression to motor-social skills to illness. Our analysis also suggests that the new childcare program led to more hostile, less consistent parenting, worse parental health, and lower-quality parental relationships.

Abstract:
A framework for the dynamic analysis of unemployment is presented and applied to Canadian and U.S. data. The focus of the analysis is upon the distinction between being unemployed and becoming unemployed, that is, between the stock and the flow of unemployment. The share of a particular group in the stock of unemployed will differ from its share in the flow into unemployment to the extent that the average duration of unemployment for the group differs from the economy-wide average. An analysis of Canadian and U.S. data leads to a series of stylized facts that permit a deeper understanding of unemployment in the two countries and of the differences between them. Significant differences in the average duration of unemployment imply that stock shares are not good indicators of flow shares; changes in the stock share of some groups are due to changes in the flow share, while for others they are due to changes in the length of unemployment spells. Explanations of the Canada-U.S. unemployment rate gap should try to accommodate at least three facts uncovered by the analysis: 1) that employer-initiated permanent separations are the primary means of entry into unemployment in Canada, while labor force entry plays a more important role in the U.S.; 2) unemployment spells are significantly longer in Canada than in the U.S. because of longer spells for most groups regardless of reason for unemployment, not because of a compositional difference in the make up of the unemployed; and 3) that longer spell duration and a higher incidence of unemployment contribute about equally to the trend increase in the Canada-U.S. unemployment differential during the 1980s.

Abstract:
Survey reports of the incidence of chronic conditions are considered by many researchers to be more objective, and thus preferable, measures of unobserved health status than self-assessed measures of global well being. The former are 1) responses to specific questions about different ailments, which may constrain the likelihood that respondents rationalize their own behavior through their answers, and 2) more comparable across respondents. In this paper we evaluate this hypothesis by exploring measurement error in these 'objective, self-reported' measures of health. Our analysis makes use of a unique data set that matches a variety of self-reports of health with respondents' medical records. Our findings are striking. For example, the ratio of the error variance to the total variance ranges from just over 30 percent for the incidence of diabetes to over 80 percent for the incidence of arthritis. Furthermore, for many conditions the error is significantly related to individuals' labor market activity, as hypothesized in the literature. In the final section of the paper we compare estimates of the effect of these different measures of health on labor market activity.

Abstract:
Maternity leaves can affect mothers' and infants' welfare if they first affect the amount of time working women stay at home post birth. We provide new evidence of the labor supply effects of these leaves from an analysis of the introduction and expansion of job-protected maternity leave in Canada. The substantial variation in leave entitlements across mothers by time and space is likely exogenous to their unobserved characteristics. This is important because unobserved heterogeneity correlated with leave entitlement potentially biases many previous studies of this topic. We find that modest mandates of 17-18 weeks do not increase the time mothers spend at home. The physical demands of birth and private arrangements appear to render short mandates redundant. These mandates do, however, decrease the proportion of women quitting their jobs, increase leave taking, and increase the proportion returning to their pre-birth employers. In contrast, we find that expansions of job-protected leaves to lengths up to 70 weeks do increase the time spent at home (as well as leave-taking and job continuity). We also examine whether this increase in time at home affects infant health, finding no evidence of an effect on the incidence of low birth weight or infant mortality.

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Abstract:
We document the application of pro-active pay equity legislation to the private sector of the Canadian province of Ontario in the early 1990s. We report substantial lapses in compliance among smaller firms where the majority of men and women work. We also find that the pay equity law had no effect on aggregate wages in female jobs or on the gender wage gap. This experience provides unique perspectives on (1) the tensions between the workings of a decentralized labour market and the principles of comparable worth and (2) the obstacles to its extension to the private sector.

Abstract:
Public health agencies around the world have renewed efforts to increase the incidence and duration of breastfeeding. Maternity leave mandates present an economic policy that could help achieve these goals. We study their efficacy focusing on a significant increase in maternity leave mandates in Canada. We find very large increases in mothers' time away from work post-birth and in the attainment of critical breastfeeding duration thresholds. However, we find little impact on the self-reported indicators of maternal and child health captured in our data.

Abstract:
Like most other developed nations, Canada has a large income security system for retirement that provides significant and widely varying disincentives to work at older ages. Empirical investigation of their effects has been hindered by lack of appropriate data. We provide an empirical analysis of the retirement incentives of the Canadian Income Security (IS) system using a new and comprehensive administrative data base. We find that the work disincentives inherent in the Canadian IS system have large and statistically significant impacts on retirement. This suggests that program reform can some play a role in responses to the fiscal crises these programs periodically experience. We also demonstrate the importance of controlling for lifetime earnings in retirement models. Specifications without these controls overestimate the effects of the IS system. Finally, our estimates vary in sensible ways across samples lending greater confidence to our estimates.

Abstract:
We investigate the effect of pro-active comparable worth legislation covering both the public and private sectors on wages, the gender wage gap and the gender composition of employment. The focus is the pay equity initiative of the Canadian province of Ontario in the early 1990s. We document substantial lapses in compliance and problems with the implementation of the law among smaller firms where the majority of men and women work. This evidence provides important lessons of the obstacles to extending pay equity to the private sector of a decentralized labor market. When we focus on those sectors of the labor market where compliance was relatively strict, our results suggest that any positive effects on the wages of women in female jobs were very modest. Our most consistently estimated effects of the law on wages are negative: slower wage growth for women in male jobs and for men in female jobs.

Abstract:
We explore the fiscal implications of reforms to the Canadian retirement income system by decomposing the fiscal effect of reforms into two components. The mechanical effect captures the change in the government's budget assuming no behavioral response to the reform. The second component is the fiscal implication of the behavioral effect, which captures the influence of any induced changes in elderly labor supply on government budgets. We find that the behavioral response can account for up to half of the total impact of reform on government budgets. The behavioral response affects government budgets not only in the retirement income system but also through increased income, payroll, and consumption tax revenue on any induced labor market earnings among the elderly. We show that fully accounting for the behavioral response to reforms can change the cost estimates and distributive impact of retirement income reforms.

Abstract:
Marriage penalties are a controversial feature of many government policies. Empirical evidence of their behavioral effects is quite mixed. This is surprising because economic theory predicts that they should have an impact on the headship decision. We investigate the removal of marriage penalties from the surviving spouse pensions of the Canadian public pension system in the 1980s. These reforms provide a simple and transparent source of identification. Our results indicate that marriage penalties can have large and persistent effects on marriage decisions. We also present evidence suggesting that it is individuals with characteristics correlated with greater wealth who respond to the penalties.

Abstract:
A large international literature has documented the labor market distortions associated with social security benefits for near-retirees. In this paper, we investigate the 'other side' of social security programs, seeking to document improvements in wellbeing arising from the provision of public pensions. To the extent households adjust their savings and employment behavior to account for enhanced retirement benefits, the positive impact of the benefits may be crowded out. We proceed by using the large variation across birth cohorts in income security entitlements in Canada that arise from reforms to the programs over the past 35 years. This variation allows us to explore the effects of benefits on elderly well-being while controlling for other factors that affect well-being over time and by age. We examine measures of income, consumption, poverty, and happiness. For income, we find large increases in income corresponding to retirement benefit increases, suggesting little crowd out. Consumption also shows increases, although smaller in magnitude than for income. We find larger retirement benefits diminish income poverty rates, but have no discernable impact on consumption poverty measures. This could indicate smoothing of consumption through savings or other mechanisms. Finally, our limited happiness measures show no definitive effect.

Abstract:
The relationship between occupational gender composition and wages is the basis of pay equity/comparable worth legislation. A number of previous studies have examined this relationship in US data, identifying some of the determinants of low wages in female jobs well as important limitations of public policy in this area. There is little evidence, however, from other jurisdictions. This omission is particularly disturbing in the case of Canada, which now has some of the most extensive pay equity legislation in the world. In this paper we provide a comprehensive picture, circa the late 1980's, of the occupational gender segregation in Canada and its consequences for wages. The sample period precedes many provincial pay equity initiatives and thus the results should provide a baseline for the evaluation of this legislation. We find that the estimated wage penalties in female jobs in Canada are generally much smaller than the estimates for the United States. Although there is some heterogeneity across worker groups on average, the link between female wages and gender composition is small and not statistically significant.

Abstract:
We study the impact of maternal care on early child development using an expansion in Canadian maternity leave entitlements. Following the leave expansion, mothers who took leave spent between 48 and 58 percent more time not working in the first year of their children's lives. We find that this extra maternal care primarily crowded out home-based care by unlicensed non-relatives, and replaced mostly full-time work. However, the estimates suggest a weak impact of the increase in maternal care on indicators of child development. Measures of family environment and motor-social development showed changes very close to zero. Some improvements in temperament were observed but occurred both for treated and untreated children.

Abstract:
We examine the effects of minimum wage legislation in Canada over the period 1975-93. For teenagers we find that a 10% increase in the minimum wage is associated with roughly a 2.5% decrease in employment. We also find that this result is driven by low frequency variation in the data. At high frequencies the elasticity is positive and insignificant. The difference in the elasticity across the bandwidth has implications for the interpretation of employment dynamics as a result of minimum wage policy and experimental design in minimum wage studies. It also provides a simple reconciliation of the "new minimum wage research," which reports very small negative, or positive, elasticities.