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Articles by MilesCorak

An Employment Insurance system for the 21st century

October 30, 2020

The 2020 Speech from the Throne boldly claims that “This pandemic has shown that Canada needs an [Employment Insurance] system for the 21st century, including for the self-employed and those in the gig economy.”

That is a tall order, a major overhaul of a complicated program in the span of the next couple of months, with little or virtually no consultation of stakeholders or engagement of experts outside of the government.

Will Minister Qualtrough, her cabinet colleagues, and of course the Prime Minister, get it right? After all the need for EI reform has long been recognized, with lessons learned well before the onset of COVID19, but always politically convenient to put off.

What does the 21st century hold for us? Well, we’ve seen a good deal during its first 20 years,

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Employment Insurance reform that promotes agency

October 19, 2020

Benefits for employee initiated time away from work should be delivered through individual accounts, and a new program for maternity and parental benefits should be started outside of Employment Insurance.

More than one out of every three dollars distributed through the Employment Insurance program are for so-called Special Benefits, those parts of the program associated with maternity and parental leave, with caregiving, and with sickness.

The fact that the COVID19 pandemic is a health crisis with important job market consequences has sharply exposed and widened gaps not just in EI’s coverage and delivery of job loss benefits, but also with these Special Benefits.

Constructive reform will require rationalization of coverage for demographic and family risks and should

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Social Policy, Now: Next steps for income support and income insurance in Canada

September 1, 2020

Three next steps for social policy involve: 1. Maximizing auto-enrollment and just-in-time program delivery; 2. Offering full income support with engagement; and 3. Offering broad income and earnings insurance with agency. In this post I introduce the detailed discussion of these proposals that you can also download.

On March 24th, 2020 the Government of Canada Tabled Bill C-13, “An Act respecting certain measures in response to COVID-19,” in the House of Commons, and the next day the Bill received Royal Assent, unleashing the most extensive and quickest change to Canadian social policy in living memory, if not in the history of the country.
The Canada Emergency Response Benefit is the most notable part of the Bill, offering $2,000 of income support every four weeks to all

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Inequality from the Child’s Perspective: Social mobility in pandemic times

August 17, 2020

Watch my presentation about the three ways the disruptions and stresses of the COVID19 pandemic threaten the future prospects of children, the implications they have for the conduct of public policy, and the possibilities for future research.
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This presentation was offered to the “Inequality by the Numbers” virtual workshop organized by The Stone Center on Socio-Economic Inequality at The Graduate Center, City University of New York. The workshop includes a host of other presentations by my colleagues at The Stone Center and the affiliated fellows. Check them all out at this link: https://stonecenter.gc.cuny.edu/news-and-commentary/inequality-by-the-numbers-2020/

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The COVID19 pandemic is a threat to social mobility, as children in disadvantaged families will face more challenges in adulthood

June 19, 2020

The COVID19 pandemic will threaten social mobility. I examine four ways in which this is likely to happen in my presentation to the ZEW Seminar on COVID19 and inequality held on June 19th, 2020. This post summarizes the major messages.
Drawing on past research I see four aspects of inequality in the lower part of the income distribution that will be exacerbated and threaten the upward mobility of children raised in challenging circumstances.
But I begin by stressing that the United States has lower social mobility than many other rich countries in part because of a more vicious intergenerational cycle of low income, and this in turn has something important to do with race and a legacy of disadvantage among African-Americans.
The obvious challenge for public policy directed to

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The Canada Emergency Response Benefit, what now? Government policy as the economy re-opens should be rules-based

May 19, 2020

We have learned from past experience that public policy proceeds through two phases during major crises: first, as one influential economist has said, “whatever it takes”; then, “Oh my God, what have we done!”
The Canada Emergency Response Benefit represents the best of whatever-it-takes policy. The speed, the depth, and the sheer uncertainty of the duration and aftermath of the COVID19 crisis called for maximum flexibility in the making of public policy, and full discretion for leaders to respond quickly. This is equally the “In it altogether” phase. It motivates significant, widely available, and easy to get income support intended to avert a liquidity crisis and ensure the survival of many asset-poor households.
The CERB is a generous payment, minimally targeted, with an on-off

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Business cycles and the unemployment rate

May 11, 2020

The COVID19 crisis has unleashed an economic crisis that is unprecedented in its speed and in its depth, making these very interesting times to study macro-economics.
Lecture 9 of Economics for Everyone describes the anatomy of the business cycle, and relates these swings in macroeconomic activity to a statistic that, as much as any other, speaks directly to the lives of citizens, the unemployment rate.
So in this lecture we describe the anatomy of the business cycle, how macro-economists link changes in GDP from its potential to changes in the unemployment rate, and finally just exactly what is this statistic called the “unemployment rate” and how is it measured by statistical agencies.
Download the presentation as a pdf.

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The meaning, the measurement, and the use of GDP

April 22, 2020

In this eighth lecture of Economics for Everyone, we begin our discussion of macroeconomics, the study of the overall level of economic activity.
The lecture offers some background and motivation by examining the sharp increase and sluggish fall of the unemployment rate during the 1930s, the Great Depression. This led to a crisis in economic thinking, and to the publication of John Maynard Keynes’s “General Theory”. Thus macro-economics was born.
Our first challenge involves a host of measurement issues, and in this lecture we examine the meaning, the measurement and the use of Gross Domestic Product. This statistic is nicely presented, reviewed, and evaluated in Diane Coyle’s book, GDP: A Brief but Affectionate History, and it is the major reading on your list for this

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COVID-19 is not the great leveller, it’s the great revealer

April 13, 2020

Source: https://twitter.com/stphnmaher/status/1249767849352101890?s=20
In a medical sense, COVID-19, as highly contagious as it is, can be thought of as the great leveller. No one has immunity, and we face the health risk of this virus with a sense of our common humanity.
But in a socio-economic sense, it is not as contagious. The jobs some of us hold give us an economic immunity, and we face the economic risk of this virus with a very different sense of our interconnectedness.

Last week Statistics Canada reported that more than one million jobs were lost as social distancing and mandated work shutdowns took force. A further two million people saw their hours of work fall dramatically, implying that over three million Canadians were directly impacted.
The big hope, the hope upon

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Canada’s unemployment rate will likely double to 10%, and that’s an understatement

April 6, 2020

Normally, I don’t venture into to predicting month-to-month changes in the unemployment rate, but this month is an exception for two reasons. The changes are certainly going to go well beyond the statistical noise inherent in the Statistics Canada survey, so there is no chance that the picture will be clouded. And history really isn’t a guide to what is coming next (in the very short term), so sophisticated models based on past data don’t have a particular advantage. My bets are on an almost doubling of the Canadian unemployment rate between February and March, with even this being an understatement because the official survey preceded some of the more dramatic shutdowns that happened later in the month. I’m suggesting that we are even probably close to 15% right now.

Only weeks

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What you need to know about Statistics Canada’s survey of the labour market

April 3, 2020

On Thursday, April 9th Statistics Canada will release the results of the Labour Force Survey for the month of March 2020. COVID19 makes this one of the most scrutinized releases in the 75 year history of the survey, reporting as it will on jobs and unemployment during the week of March 15th to March 21st. Here’s what you need to know, and what to look for.

1. As luck has it, the survey is well timed to capture the start of the economic meltdown
The survey is anchored on a particular week of the month, and this conditions the relevance of the statistics for understanding the early fall out of COVID19.
The Labour Force Survey gives a snapshot of labour market activities during what the statisticians call “the reference week,” which is usually the week containing the 15th of the

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Intergenerational mobility over time and space

April 2, 2020

This is Lecture 7 of the course ECON 85600, “Inequality, Economic Opportunity, and Public Policy,” that my class and I are now conducting online. You are welcome to participate, and can review all the course materials at https://milescorak.com/equality-of-opportunity/teaching/ .
Warning: this is likely to interest social scientists in sociology, economics, or other fields, interested in developing a specialized knowledge of the subject!

This lecture summarizes research on how we should think about and interpret changes in intergenerational income mobility over time, and across space.
The empirical literature is not clear on the degree to which, or even whether, intergenational income mobility has changed in the United States. The focus in this presentation is to interpret these

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Public policy in competitive markets, for the bad and for the good

April 1, 2020

In this seventh lecture of Economics for Everyone, we address the nature of government intervention in perfectly competitive markets.
Perfectly competitive markets lead to efficient outcomes, in the sense that no one can be made better off without making someone worse off. But that doesn’t mean we like the outcomes, that they are fair or justice, and as a result governments are often pressured, or even captured, to intervene, sometimes not for the broader social good, but for the benefit of a few to the cost of many.
At the same time competitive markets don’t always lead to efficient outcomes because prices don’t may not reflect all social costs and benefits. So we may have too much, or too little ,of some goods if we let the market work. Governments are often pressure to

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Big government, just in time

March 27, 2020

Big government road into town just in time, but alas when he jumped off his bronco and reached for his six-gun it became clear he wasn’t just-in-time government.
What is clear, if nothing else, from the COVID-19 crisis, we should always choose our leaders with one thing in mind: character.
Character determines how they will stand up to the unexpected. That’s what really matters. And frankly, all of them—municipal, provincial, federal—are passing the character test. Whether it is Legault, Ford, or Kenney, or whether Nenshi or Tory, and yes of course whether it is Trudeau, in crisis they have all shown true character.
Opinion polling shows that strong and growing majorities of Canadians feel their governments are doing a good job in responding to the COVID-19 outbreak. And it’s

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The geography of intergenerational mobility in Canada and the United States

March 26, 2020

This is Lecture 8 of the course ECON 85600, “Inequality, Economic Opportunity, and Public Policy,” that my class and I are now conducting online. You are welcome to participate, and can review all the course materials at https://milescorak.com/equality-of-opportunity/teaching/ .
Warning: this is likely to interest social scientists in sociology, economics, or other fields, interested in developing a specialized knowledge of the subject!

This presentation summarizes research on comparing social mobility in Canada and the United States that finds intergenerational income mobility is lower in the United States than in Canada, but varies significantly within each country.
The full reading list and access to other papers are on the page devoted to this lecture at

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“When we talk about economics, there’s something known as a demand curve with elasticity”

March 25, 2020

“We might as reasonably dispute,” Alfred Marshall wrote in his famous economics textbook first published in 1890, “whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production.”
Prices are determined in the marketplace, through the communication between buyers and sellers, jointly through a negotiation reflecting their willingness to pay, and their costs of offering. Marshall offered us these tools, the demand curve and the supply curve, to understand price determination in perfectly competitive markets. And he also characterized them, and used them to illustrate price determination in a wide variety of examples.
As a part of this he introduced the notion of “elasticity,” a

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A letter to the Canadian Prime Minister, with two suggestions for next steps in dealing with #COVID19

March 22, 2020

Prime Minister,
I certainly hope you and yours are well.
I was in New York City up until last weekend. Earlier in the previous week the university where I work announced that it was moving all courses online, and closing the campus. There was really no further need for me to stay in the City, but my initial thought was to wait it out, and decide later on when to return to Canada.
I started to have second thoughts when a student emailed me for advice just after President Trump announced that travel from Europe to the United States would be banned. He’s from Mexico, and said that he trusted the Mexican health care system more than the American, and wanted my advice on whether he should return home.
If that wasn’t enough to give me pause, when I saw the twitter feed of the Minister

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Intergenerational mobility in theory

March 19, 2020

This is Lecture 6 of the course ECON 85600, “Inequality, Economic Opportunity, and Public Policy,” that my class and I are now conducting online. You are welcome to participate, and can review all the course materials at https://milescorak.com/equality-of-opportunity/teaching/ .
Warning: this is likely to interest social scientists in sociology, economics, or other fields, interested in developing a specialized knowledge of the subject!

This lecture examines the influential theoretical model of intergenerational mobility published by Gary Becker and Nigel Tomes in 1986, offering an overview of the theory, some predictions it makes, and some directions it suggests for future research.
The full reading list and access to other papers are on the page devoted to this lecture at

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“Perfect markets and the ‘World of Truth’”

March 3, 2020

In his widely read guide to economics—The Undercover Economist—Tim Harford writes:
In a free market, people don’t buy things that are worth less to them than the asking price. And people don’t sell things that are worth more to them the asking price. … The reason is simple: nobody is forcing them to, which means that most transactions that happen in a free market improve efficiency, because they make both parties better off—or at least not worse off–and don’t harm anyone else.
The chapter of his book called “Perfect Markets and the ‘World of Truth’” is the starting point and the end point of the next block of lectures in our course Economics for Everyone. Harford is describing both the power of markets, and the potential for their failures, big and small. He is describing

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John Roemer talks about the challenges of becoming a researcher to the students of the Applied Economics Seminar at The Graduate Center

February 25, 2020

This is the second in a recurring series of interviews where the PhD students at The Graduate Center talk with economists and other social scientists about their work and research experience. With these interviews the students are exploring the challenges of formulating good research questions and establishing a research agenda. Hopefully, other early career researchers will find this series a helpful tool.
In this installment, Goncalo Costa, a PhD of economics at The Graduate Center and Stone Center Senior Scholar, interviews John Roemer, Professor of Political Science and Economics at Yale University who visited the department on February 3rd, speaking to a paper called “What is Socialism Today.”
The two discuss John’s recent work on a theoretical comparison of the efficiency

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David Ricardo’s explanation of the case for free trade rests on some basic economic principles, but also has a big public policy blind spot

February 25, 2020

One survey of professional economists in the United States found that 93% would agree with the claim that restrictions on free trade through tariffs and import quotas would reduce economic welfare.
Yet, I’m certain those advocating for free trade are often accused of having a blind spot. Is there something in the economic method, which can legitimately lay claim to being scientific, that also blinds its practitioners to what others see so clearly?

The case for free trade rests upon a logic derived from scarcity, opportunity costs, and marginal reasoning applied to a two-good world. With two goods there is the possibility of exchange, of trading. In effect, we are asking the more general question: are there gains from trade?
David Ricardo is the starting point for the economic

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Scarcity and its implications

February 18, 2020

Scarcity defines the economic way of thinking
Scarcity is a simple idea, yet it has major implications.
If, as individuals or as a society, we have multiple objectives, and if our desires for these goals exceed the time and resources that can be used to attain them, then given that these resources can be used in different ways it matters how we allocate them. It matters because our goals differ in their significance.
Lionel Robbins, who taught at the London School of Economics, defined economics as “the science which studies human behaviour as a relationship between ends and scarce means which have alternative use” in a book published in 1935.
We have to choose, we have to recognize the terms of the trade-offs between the choices available to us, and we have to do this in a way

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Leah Boustan talks about the challenges of asking the right research questions to the students of the Applied Economics Seminar at The Graduate Center

February 10, 2020

This is the first of a recurring series of interviews where the PhD students at The Graduate Center talk with economists and other social scientists about their work and research experience. With these interviews the students are exploring the challenges of formulating good research questions and establishing a research agenda. Hopefully, other early career researchers will find this series a helpful tool.
In this first installment, Miles Corak, professor of economics at The Graduate Center and Stone Center Senior Scholar, kicks things off by interviewing Leah Platt Boustan, Professor of Economics at Princeton University who visited the department on January 28th, speaking to a paper called “Economic and cultural effects of living in an ethnic enclave: Early 20th century evidence

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Poverty and equality of opportunity: three pictures to motivate policy for social mobility

November 25, 2019

Read my comments presented to the Public Economics Forum on “Intergenerationally Disadvantaged: Newest Evidence and What it Means for Policy,” organized by the Melbourne Institute for Applied Economic and Social Research, on November 26th, 2019 in Canberra, Australia.
Social mobility varies across countries, but it varies in a particular way, a way that I argue is relevant for the conduct of public policy.
Inequality begets inequality. Up to 50% of income inequality is passed on to the next generation in countries like the United Kingdom, Italy, and the United States, but only 20% or even less in countries like Norway, Denmark and Finland, where there is a much smaller gap between parent incomes.
Incomes are stickier across generations where inequality is higher
But different

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Tax the rich! Tax the rich! Tax the rich? But why?

November 12, 2019

Jagmeet Singh’s promise in his election night speech that “we’re going to make sure the super wealthy start paying their fair share” was met with cheers, the decibel level rising as his fellow New Democrats chanted: “Tax the rich! Tax the rich! Tax the rich!”
The leader of the New Democratic Party addresses his supporters.
It is not entirely true that the federal election ignored big policy issues, but if it was issues-driven, how did a wealth tax fly under the radar?
At some point in the coming weeks Mr. Trudeau will meet Mr. Singh over coffee to talk tax policy. Sadly, the election left Canadians no wiser as to what divides progressives on the issue, but if you want the full picture look south to the Democratic leadership campaign.

Four years ago a wealth tax was a policy that

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My Mandate Letter for the Minister of Families, Children and Social Development

November 4, 2019

The first step a newly elected Prime Minister takes on the road to governing is choosing the members of cabinet and giving them their marching orders. Prime Minister Trudeau set to this task with zeal when he was first elected in the autumn of 2015, and surprised many by making the mandate letters public. The CD Howe Institute asked a number of experts to draft their versions, and this post offers a slightly longer version of the mandate letter I wrote for the Minister of Families, Children and Social Development published by the Institute.
Click on image to link to the 2015 Mandate Letter
All Canadians have a right to live the life they value with dignity.
As Minister of Families, Children and Social Development, your actions should be governed by this principle, and

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How do the party platforms address the changing nature of work, pay, and poverty?

October 7, 2019

The world of work is changing and creating anxiety about jobs and incomes. There is some overlap on how the major parties contesting the Canadian federal election propose to deal with these challenges, but the Conservatives are definitely the outlier. The Greens score high on vision but low on feasibility,  both the New Democrats and Liberals put a list of reasonable proposals on the table, with the Liberals offering a bigger vision that is also feasible. The Conservatives don’t seem to propose anything to address the world of work, imagining citizens as consumers, and implicitly offering a smaller role for government in the workplace.

The “changing nature of work” has to be—right up there with climate change—one of the hottest issues facing Canadians, a big cause of uncertainty

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Intergenerational mobility between and within Canada and the United States

April 15, 2019

Intergenerational mobility is lower in the United States than in Canada, but the border only partially distinguishes the two countries with mobility varying significantly within each. The within-country differences and similarities hint at some of the reasons why the United States has lower social mobility than many other rich countries.
This is the main theme of a study released by the National Bureau of Economic Research, based upon Canadian data my co-authors and I constructed with the cooperation of Statistics Canada. Our research offers a more accurate comparison between these two countries than any cross-country comparisons made in the literature to date: tax-based administrative data, used to define similar measures of income, and coming close to covering the total

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The “middle class” is within easier reach for low income Canadian children, than it is for low income Americans

April 15, 2019

Upward mobility is more likely in Canada than in the United States, with the middle class within easier reach for Canadian children raised in low income families than for low income American children.
Canadian children raised by parents with incomes at the bottom 10 percent can expect to be earning enough as a young adults to place them much higher, above the 40th rung of a 100 rung income ladder, and significantly higher than their American counterparts. To reach a similar point on the income ladder an American child would have to have parents who ranked as high as the 39th percentile.
Source: Connolly, Corak, Haeck (2019, Figure 3). Click on image to enlarge.
This is one important finding in a study released by the National Bureau of Economic Research, based upon Canadian data

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If there is such a thing as the “Canadian Dream,” it would look very much like what Americans say is the “American Dream”

April 15, 2019

Public opinion polls suggest that Canadians and Americans share basic attitudes toward inequality and opportunity, and toward the underlying drivers of upward mobility. If there is such a thing as the “Canadian Dream,” it would look very much like what Americans say is the “American Dream.”
The Pew Charitable Trusts conducted a number of public opinion polls asking Americans what meaning they attach to the phrase “The American Dream,” and these have been adapted and conducted in Canada with remarkably similar responses.
In these polls respondents were asked to indicate the degree to which they agreed with a series of possible definitions of the American Dream. Sixty percent of American respondents ranked “being able to succeed regardless of family background” eight or higher on a

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