Derek Hum

Wage Opportunities for Visible Minorities in Canada

The wage opportunities afforded different racial groups vary considerably. We present a new analysis of wage differentials for different visible minority groups in Canada which also accounts for immigration background, using the first wave of the Survey of Labour and Income Dynamics. With the exception of Black men, we find no statistically significant wage disadvantage for visible minorities who are native born. It is primarily among immigrants that wage differentials for visible minority membership exist. Our results suggest that policies to achieve a colour-blind Canadian labour market may have to focus more on immigrant assistance and less on traditional employment equity legislation.

Stylized Facts and Stylized Illusions: Inflation and Productivity Revisited

Recent estimates of a negative empirical relationship between inflation and the rate of growth of productivity provide a strong case for vigorous anti-inflationary policy. This paper tests the robustness of this evidence using long quarterly and annual datasets for four countries (Canada, United States, United Kingdom, West Germany). Our results from cointegration and other time series tests show no evidence for any connection between inflation and the level of productivity. We do find a strong connection between inflation and productivity growth, but it is so internally inconsistent as to be incredible. The best explanation is that it is accounted for entirely by statistical bias from attempting to cointegrate stationary and non-stationary variables.

Canadians with Disabilities and the Labour Market

The master file of the Labour Market Activity Survey is used to investigate the effect of disability on labour market activity. Our results indicate the importance of acknowledging the severity of disability, of distinguishing between men and women, and of distinguishing between earnings and hours of work when considering the labour market performance of Canadians with functional limitations. Employment policies directed toward Canadians with disabilities should therefore recognize the heterogeneity of this group and consider alternative initiatives to aid those with differing severity of functional limitations. The paper finds no evidence of earnings discrimination against employed men and women with disabilities, although these results must be interpreted cautiously.

Job-Related Training Activity by Immigrants to Canada

The 1998 Adult Education and Training Survey (AETS) identifies immigrants for the first time and is used to compare the training experiences of immigrants and native-born Canadians. Previous Canadian research indicates that immigrants generally acquire less human capital after arrival than the native-born. Further, if foreign human capital has reduced value in the host labour market, training will be limited for older migrants. We find that training is reduced by about one year for each year that migration is delayed for both men and women in both pooled and separate samples of immigrants and the native-born. Immigrants who arrive in Canada as adults train less than those who arrive as children, while immigrants who arrive as children do about as well as the native-born. Financial constraints may explain some of the training disadvantage, but other common explanations, such as language, are rejected.

The legacy of immigration: labour market performance and education in the second generation

Previous research finds that the children of immigrants, or the second generation, earn at least as much as other native born but that there are persistent ethnic differences in the intergenerational transmission of education and wages. We explain why these results are not incompatible and extend the empirical evidence in several directions using the Canadian Survey of Labour and Income Dynamics. First, we estimate a model of wages, earnings and hours worked using modern econometric techniques to corroborate earlier US results of complete integration by the second generation in the labour market. We find that ethnic differences in labour market performance are significant, but that these difference do not alter conclusions about the relative performance of the second generation. Second, we find a source of superior labour market performance for the second generation in higher educational attainment, which constitutes an important legacy of immigration that should not be ignored. Third, we find that the definition of the second generation matters. Men and women with two immigrant parents achieve about one additional year of education, while those with one immigrant parent achieve about one-half that educational advantage. We conclude that the education effect of an immigrant mother or father are comparable.

Economic Response to a Guaranteed Annual Income: Experience from Canada and the United States

This article reviews research from the five income-maintenance experiments in Canada and the United States. After sketching the historical and political context of the experiments, we compare their designs and discuss some important analytic difficulties. Our primary focus is the work-incentive issue, both nonstructural estimates of the experimental effects and elasticity estimates of structural labor-supply functions. We provide initial estimates of nonstructural and structural models for the Canadian experiment. We discuss more briefly some non-work-response findings associated with a guaranteed annual income and offer some personal comments on social experimentation and the policy process.

Missing data estimators in the general linear model: an evaluation of simulated data as an experimental design

Previous simulations have reported second order missing data estimators to be superior to the more straightforward first order procedures such as mean value replacement. These simulations however were based on deterministic comparisonsbetween regression criteria even though simulated sampling is a random procedure. In this paper a simulation structured asan experimental design allows statistical testing of the various missing data estimators for the various regression criteria as well as different regression specifications. Our results indicate that although no missing data estimator is globally best many of the computationally simpler first order methods perform as well as the more expensive higher order estimators, contrary to some previous findings.

Karhunen-Loève Analysis of Historical Time Series with an Application to Plantation Births in Jamaica

Abstract A comparison of two spectral analysis procedures is presented: the frequency domain (Fourier transform) model and the Karhunen-Loeve time domain model. Both models are used in turn to analyze a plantation births series during the period 1880–1938. The principal components model can be adapted as the discrete analogue of the Karhunen-Loeve stochastic integral equation in order to decompose a single time series into trend, cycle, and seasonality. The results indicate that the Karhunen-Loeve decomposition, which has been less popular in applied work than the frequency domain model, can provide the social historian with useful results that are easier to interpret.

Is Hypoinflation Good Policy

One argument against a policy to achieve absolute price stability is that workers resist pay cuts. We examine several Canadian microdata sources and corroborate earlier evidence of pay-cut resistance, particularly recently as inflation has approached zero. We then use data on industrial sectors to estimate that pay-cut resistance reduced employment growth by from 0.6 to 1.5 percent per annum from 1993 to 1995. We also estimate a model of wage settlements, treating pay freezes and pay cuts as censored data, which implies that pay-cut resistance may have increased the annual unemployment rate by as much as 2 percent during the same period. In view of these results, the case for very low inflation targets should be reexamined.

The Declining Retirement Prospects of Immigrant Men

Dans cet article, nous comparons les perspectives de retraite des hommes immigrants avec celles de leurs concitoyens nés au pays à partir des données de l’Enquête sur la dynamique du travail et du revenu. Nous observons d’abord un écart significatif entre les deux groupes, les revenus provenant de régimes privés de retraite étant pour les immigrants de 43 % inférieurs à ceux des autres Canadiens; dans le cas des contributions à un régime privé de retraite, l’écart est de 30 %. Au niveau du régime de retraite gouvernemental, l’écart des revenus est négligeable, ce qui contribue à réduire, mais en partie seulement, l’écart global des revenus de retraite. De plus, ces deux écarts sont plus élevés dans le cas des immigrants récents, ce qui s’accorde avec le fait que les revenus de ces immigrants sont plus faibles. Nous considérons ensuite l’âge, en lien avec les revenus de retraite et les contributions à un régime, et nous montrons les problèmes que pose l’interprétation des résultats obtenus si nous n’apportons pas certains ajustements. Quand nous tenons compte de l’effet de l’âge et des différences de revenus, l’écart des contributions à un régime de retraite privé est quand même de 11 %; toutefois, parmi tous les hommes qui contribuent à un tel régime, il n’y a pas de différence quant au taux des contributions par rapport aux revenus. Enfin, les contributions des immigrants récents à un régime privé sont significativement inférieures; ils semblent ignorer, beaucoup plus que les autres immigrants et que les Canadiens nés au pays, les occasions qui leur sont fournies de contribuer à un tel régime, ce qui pourrait avoir des implications négatives sur les régimes publics de retraite canadiens.