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Worthwhile Canadian Initiative

The Worthwhile Canadian Initiative blog is a self proclaimed “mainly Canadian economics blog”. Written by a group of intelligent economists, this blog is filled with top quality posts ranging from health, finance and inequality.

13 facts every Canadian economics student needs to know

1. Canada is a big country ...but not as big as one might think. Some maps show Canada as an enormous country, about twice the size of China or the US, similar in size to the entire continent of Africa: However maps like the one shown above distort the size of northern countries, making them appear much larger than they actually are. (This video explains why all world maps are wrong.) The "Peters projection" world map distorts the shape of countries, but shows their true size: Measured...

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Movements in income inequality in Canada, 1944-2010

Here are the estimates for the Gini coefficients for Canada, taken from individual tax files (see here for more about where the data came from): As was the case for median incomes, I am encouraged by the fact that the benchmark Statistics Canada series and the tax file data say basically the same thing about the evolution of income inequality over the period in which they overlap: the Gini coefficient starts to increase from the late 70s/early 80s until about 2000 and then...

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What happened to real incomes in the 1970s?

Here are the estimates for average and median total incomes based on tax file data (see this post for details): I was comforted to see that the estimates for median incomes after 1976 have the same U-shape as those in the Statistics Canada tables : The fact that the two data sources say basically the same thing about what happened after 1976 gives me some hope that the tax file data before 1976 shouldn't be dismissed out of hand. And if you take them seriously, then it the fact...

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Project Link update: The evolution of the distribution of income in Canada, 1944-2010

Project Link has been updated; the Excel file with the data updated through to June 2021 is available here. I skipped the 2020 update for Project Link for a couple of reasons. There was obviously the distraction of the pandemic, but mainly because I hadn't yet finished the next extension. Every year, I try to extend the data base, and the latest extension took more time than I had originally expected. This year's extension is the data set behind this animation I posted on twitter a while...

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Bitcoin as PAYGO Pension Plan. And Land.

Suppose the government starts a Pay As You GO (unfunded) pension plan. What the young pay into the plan today is what the old take out today. The first generation gets lucky; they get a pension paid out, but never put anything in.  And if the plan ever gets wound up, the last generation of old get unlucky; they paid in, but never get anything out. Bitcoin is the same. What the young pay in to buy Bitcoin today is what the old take out when they sell Bitcoin today. The first generation...

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Do the self-employed opt out of the Canada Pension Plan?

In 2017, anyone with earnings was required to pay $4.95 in Canada Pension Plan contributions for every $100 of earnings (up to a maximum earnings threshold of $51,800 - rates here). For the employed, their $4.95 CPP/QPP contribution was matched by an equal contribution by their employer. However self-employed individuals are required to pay the entire employer+employee contribution themselves, amounting to $9.90 for every $100 of earnings. Now the self-employed have an out. They can...

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If you wanna run hot you gotta run steady

Canadian economist Richard Lipsey would always insist that the Phillips Curve is a curve, and not a straight line. Maybe because wages and prices are stickier down than up. Or maybe because unemployment can't go below 0%. Or both. Here's why that matters for macroeconomic policy: Suppose the central bank wants 2% inflation on average, over the longer term. One way to get that result would be to flip a coin, every year, or every decade, or whatever. If it's heads, the central bank "runs...

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The Economics of Increasing Immigration During an Economic Crisis

The following is a guest post by Mikal Skuterud of University of Waterloo On February 14, the Federal Government issued 27,332 invitations for permanent residency to Canadian Experience Class (CEC) applicants in the Express Entry pool. To issue this unprecedented level of invitations, Immigration, Refugees and Citizenship Canada (IRCC) reached deep into the pool, providing invitations to applicants with record-low Comprehensive Ranking System (CRS) scores.   The CRS is a points system...

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Rapid Vaccinations Can Help Avoid the `Third Wave’ in Ontario

The following is a guest post by Miguel Casares (Universidad Publica de Navarra, Spain), Paul Gomme (Concordia University), and Hashmat Khan (Carleton University) Of utmost importance is improving our understanding of the complex interactions between: (a) the epidemiology that describes the evolution of the coronavirus/COVID-19; and (b) the social and economic choices of individuals.  Towards this end, we have developed a model that captures some salient elements of this interaction. The...

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100 million is a really big number: a review of Doug Saunders’ Maximum Canada

The following is a guest post by Mikal Skuterud, professor of economics at University of Waterloo  Despite my interest in Canadian immigration policy, I’ve been hesitant to read Doug Saunders’ latest book Maximum Canada: Toward a Country of 100 Million. The idea that the solution to Canada’s economic challenges is more people, and a lot more people, seems naïve. In hindsight, I waited too long. Saunders’ account of Canada's immigration history is intriguing and his writing, as always,...

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