Ross Finnie

Earning differences by major field of study: evidence from three cohorts of recent Canadian graduates

Abstract This paper reports the results of an empirical analysis of earnings differences by major field of study for three cohorts of recent Canadian Bachelor’s level university (‘college’) graduates. Earnings differences are statistically significant and in many cases large; adding various control variables to the relevant regression models typically reduces the discipline effects but leaves significant differences; the patterns are relatively consistent for male and female graduates, for the two points in time (two and five years) following graduation observed, and for the three cohorts of graduates, although there are some notable departures from these norms. A simple measure of the (conditional) variability of earnings indicates that the overall conditional variability in earnings has been relatively constant across cohorts, while some interesting patterns by discipline are observed. Various implications of the findings are discussed.

Who moves? A logit model analysis of inter-provincial migration in Canada

This paper addresses the topic of inter-provincial migration in terms of the basic question: ‘Who moves?’. Panel logit models of the probability that an individual changes his or her province of residence from one year to the next over the 1982–1995 period are estimated using tax-based longitudinal data. It is found that moving is (i) inversely related to the home provinces population size, presumably reflecting local economic conditions and labour market scale effects, while language also plays an important role; (ii) more common among residents of smaller cities, towns, and especially rural areas than those in larger cities; (iii) negatively related to age, marriage, and the presence of children for both men and women; (iv) positively related to the provincial unemployment rate, the individuals’ receipt of unemployment insurance (except Entry Men), having no market income (except for Entry Men and Entry Women), and the receipt of social assistance (especially for men); (v) (slightly) positively related to earnings levels (beyond the zero earnings point) for prime aged men, but not for others; and (vi) more or less stable over time, with mens rates declining slightly and womens holding steadier or rising slightly, indicating a divergence in trends along gender lines.

Minorities, Cognitive Skills and Incomes of Canadians

This paper uses the Statistics Canada Survey of Literacy Skills Used in Daily Activities (LSUDA) to investigate minority-white income differences and the role cognitive skills play in those patterns. Some minority groups have substantially lower (tested) levels of literacy and numeracy skills than whites and other more economically successful minorities and, in the case of certain male groups, these differences play a significant role in explaining the observed income patterns. The ethnic-white income gaps are, however, much smaller for women, and the literacy and numeracy variables do not have much of a role to play in explaining those differences. Various policy implications are discussed.

Student loans in Canada: an analysis of borrowing and repayment

Abstract This paper reports the results of an econometric analysis of the borrowing and repayment patterns of Canadian bachelors level university graduates, using data from the National Graduates Survey (NGS) of the class of 1990. After confirming the intuition that the level of borrowing is determined by supply-side rather than by demand-side factors, we analyze the repayment experience of the graduates. We calculate that the fraction of graduates who reported problems repaying their student loans was, overall, quite small, falling in the 7–8 percent range. Among both men and women, graduates with low current earnings and those in fields likely to have low lifetime earnings reported significantly greater problems with repayment. Holding other variables constant, women reported more difficulty in repayment than men. Overall, it would seem that women borrowed only slightly less than men, repaid as quickly as men (despite lower earnings), but reported having significantly more difficulty in repayment.

Literacy and labour market outcomes: self-assessment versus test score measures

This paper looks at the determinants of literacy and the relation between literacy and labour market outcomes while focusing on comparisons of self-assessment versus test score measures of literacy. The test score measure performs considerably better than the self-assessments when literacy is treated as an outcome variable in terms of the overall fit of the model and the specific coefficient estimates, with the self-assessments sometimes actually generating wrongly signed parameters. The test score measure also performs much better as an explanatory variable in the employment models, with the self-assessment variable generating significant underestimates of the effects of literacy on the probability of being employed. Finally, the test score is also superior in the income models, although the self-assessment measure is at least a reasonably good performer in this regard, suggesting that the main results reported in much of the existing literature (based on such measures) should perhaps be taken as good representations of the true underlying relationships.

Cognitive skills and the youth labour market

With the use of test score data it is found that literacy, numeracy and education strongly influence the probability of being employed, unemployed, having a wage-paying job and obtaining government transfer payments in addition to incomes, weeks worked and weeks unemployed for a sample of 16 to 24-year-olds.

The Effects of Family Income, Parental Education and Other Background Factors on Access to Post‐Secondary Education in Canada: Evidence from the YITS

This paper exploits the unprecedented rich information available in the Canadian Youth in Transition Survey, Sample A (YITS‐A) to investigate issues related to access to postsecondary education (PSE). The questions we ask are basically two‐fold: i) What are the various influences on access to PSE of an individual’s background, including more traditional measures such as family income and parental education, as well as a broader set of measures such as high school grades, social/academic “engagement,” and other cognitive and behavioural influences? and ii) How does including such a more extensive set of variables than has been possible in previous studies change the estimated effects of the more conventionally measured family/parental influences (family income and parental education) on access to PSE, and thus indicate how much of the latter influences operate through (or otherwise proxy) the effects of the broader set of variables, thereby isolating the direct – as opposed to indirect – influence of these traditional measures on access? Utilizing multinomial logit models to capture the choice of level of PSE (i.e., college versus university) we find that parental income is positively related to university attendance, while having only a minor effect on college, but this effect is greatly diminished once parental education is included in the estimation. Similarly, the importance of parental education to university attendance is somewhat diminished once certain measures of high school grades, academic “engagement,” and a standardised reading test score are included – although, interestingly, these additional variables have little further affect on the family income influences. These results thus support other recent work which points to the importance of addressing earlier cognitive and behavioural influences, and family “culture” more generally as captured by parental education, in effecting change in the rates and patterns of participation in PSE – although family income does remain a significant independent factor, albeit of significantly reduced influence.

From School to Work: The Evolution of Early Labour Market Outcomes of Canadian Postsecondary Graduates

This paper reports the results of an empirical analysis of the early labour market outcomes of Canadian postsecondary graduates based on the National Graduates Surveys, representing those who finished their college or university programs in 1982, 1986, and 1990. The major findings include that postsecondary graduates have generally been doing quite well as a group, with most finding full-time and permanent jobs, receiving reasonably high earnings, and otherwise successfully moving into the laour market according to the various outcomes measured here; that the school-to-work transition is clearly a process, rather than an event, with most outcomes improving significantly from two to five years following graduation; that these outcomes vary by level (College, Bachelors, Masters, PhD) and sex; and that successive cohorts of graduates did not experience any widespread decline in their labour market fortunes over this period.

A longitudinal analysis of earnings change in Canada

This paper examines trends in earnings, using tax-based longitudinal data from the last two decades and synthetic cohort analysis.

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.