StatCan Debunks Small-Business Mythology

Canadian economic commentators often worship small business as the supposed source of economic dynamism and growth. This cult of small business has greatly influenced public policy, with federal and provincial governments giving huge tax preferences to small corporations. But new Statistics Canada research finds: “The gap between the levels of labour productivity in Canada and the United States is due […]

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Funding Cuts to Alberta’s PSE Sector: There Are Alternatives

It has recently been reported that the University of Alberta wants to “reopen two-year collective agreements” with faculty and staff “to help the university balance its budget…” This appears to be in direct response to Alberta’s provincial government announcing in its March budget that there would be a “7% cut to operating grants to universities, colleges, and technical institutes.” This […]

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Gender Wage Gap hurts Economic Growth

BREAKING NEWS: Women are paid less than men across OECD (read: rich) countries. OK, it’s not breaking news.  Not even close.  In Canada the ‘Female to Male earnings ratio’ has hovered around the 70% mark for the past 20 years.  And for women with university degrees, the ratio peaked in the early 1990’s, and has been below 70% for 13 […]

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Selective Amnesia at the Bank of Canada

A guest blog from Marc Lavoie and Mario Seccareccia, Department of Economics, University of Ottawa  In a speech delivered on October 4th to the Winnipeg Chamber of Commerce (see: http://www.bankofcanada.ca/2012/10/speeches/a-measure-of-work/), the senior deputy governor of the Bank of Canada, Tiff Macklen, has offered some self-congratulatory remarks, by arguing that the near-zero inflation policy pursued by the Bank under the leadership […]

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Labour Losing to Capital

The just-released OECD Employment Outlook – full text not available on line – has an interesting chapter on the sharp decline of labour’s share of national income in virtually all OECD countries over the past 30 years, and especially the last twenty years. The median labour share in the OECD fell from 66.1% in the early 1990s to 61.7% in […]

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New Generation of Thinkers Link Inequality, Innovation and Prosperity

(This guest blog was written by Mike Marin and Anouk Dey. It originally appeared in the Toronto Star on February 24. The authors are part of a team that produced the report Prospering Together (in English http://bit.ly/z4GQx5  and in French http://bit.ly/yabiK2) What do the Occupy Movement and Canadian software giant OpenText have in common? Most people, including the campers and […]

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Drummond’s Productivity “Puzzle.”

Don Drummond confesses that he has been wrong to believe that changes in public policies – such as free trade, cuts to corporate taxes, low inflation, the  introduction of the GST, balanced budgets and reductions to inter provincial trade barriers (aka the neo liberal agenda) – are the key to improving Canada’s dismal productivity record. For many years the author […]

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Economic Climate and Inequality

The December issue of the quarterly Economic Climate for Bargaining publication I produce is now on-line.  This issue has a number of pieces on issues of inequality, including: Rising inequality is hurting our economy Labour rights, unions and the 99% Canadian economy bleeding jobs; public sector cuts to intensify Recession and cuts hit Aboriginal and racialized workers hardest It also […]

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Keynesian Productivity

Statistics Canada released an interesting study today on the slowdown of productivity growth in Canadian manufacturing. Conservative economists tend to view productivity as a microeconomic issue, reflecting the allocation of scarce resources through the market. The way to maximize productivity is to remove taxes, regulations and other “barriers” to the market’s free functioning. However, the largest driver of productivity is […]

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Who’s over or under-paid?

We all know that the wages and compensation individuals receive in private competitive markets reflects their productivity, unless pesky unions and government regulations get in the way–because Economics 101 (and Michael Hlinka) have told us so.   Corporate CEOs are worth every penny their “independent compensation committees” award in compensation and stock options them because they are “creating value” and hedge fund operators are […]

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Manufacturing Does Matter

Andrew Sharpe has published an interesting new study on the marked slowdown in Canadian labour productivity growth from the early 200s. He decomposes the decline in productivity growth into changes at the detailed industry level, and finds that the majority (53%) of the slowdown in productivity growth between 1997-2000 and 2000-2007  is attributable to changes in manufacturing, with the lion’s […]

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Industry Canada Pans Free Trade?

Shortly before I left Canada, Canadian Business magazine contacted me for a story on productivity. It highlighted a presentation by Industry Canada economist Annette Ryan. I was struck by slide 40 (41 of 44 in the PDF): In an endogenous sunk cost model, opening free trade and intensifying competition leads to a divergence in innovation paths. Firms in the less […]

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Canada’s Productivity Problem

Back in June, the TD Economics group released a major report co-authored by Don Drummond: “The Productivity Puzzle. ” It provides a comprehensive overview of major studies and the empirical evidence, and should help spark some critical reflection. Progressive economists should agree with Drummond that productivity growth is vitally important to the growth of living standards over the medium and […]

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Mercurial Productivity

Here is some of what Terry Corcoran wrote in today’s Financial Post about Bank of Canada Governor Mark “Carney’s suggestion that Canadian business has so far ‘disappointed’ because it has failed to revive Canada’s lagging productivity”: Central bankers appear to know many things, and have big fancy computer systems and economic models to tell them what’s happening in an economy […]

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Private sector just not getting it up

We’ve been told for years that corporate tax cuts would work like viagra to boost private sector investment and productivity, and no doubt we’ll hear much more about it in next week’s budget.  But it just ain’t working.  Today’s release by Statscan of private and public investment intentions shows just how limp private sector investment is expected to be in the coming […]

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Reining in speculation in the housing market

This morning federal finance minister Flaherty announced a number of measures ostensibly aimed at reining in speculation in the housing market.  His announcement was typically well-timed to coincide with the Vanier Institute’s annual report on the state of Canadian family finances, which reports record high levels of household debt, growing inequality and housing prices increasingly out of whack with incomes. But […]

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Productivity and Jobs

There is an interesting piece on productivity in today’s Daily looking at the changing relationship between output change and employment change in recessions, over time and as between Canada and the US. One part of the story is that employers used to hoard labour during recessions, but are now inclined to cut jobs and hours quickly in response to a […]

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Public Infrastructure and Productivity

A well-timed release from StatsCan today that speaks for itself in terms of relevance to the current Budget debate: http://www.statcan.gc.ca/daily-quotidien/090114/dq090114a-eng.htm “Between 1962 and 2006, roughly one-half of the total growth in multifactor productivity in the private sector was the result of growth in public infrastructure. Public capital (the nation’s roads, bridges, sewer systems and water treatment systems) constitutes a vital input for […]

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We need public investment

http://news.guelphmercury.com/Opinions/article/409306 Today’s economic update by Jim Flaherty must provide investment in jobs the canadian press November 27, 2008 Ken Georgetti Federal Finance Minister Jim Flaherty must use today’s economic update to become part of the solution to our ever deepening economic crisis. Governments, leading economists and even the International Monetary Fund agree that cutting interest rates alone will not save […]

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Canada-U.S. Productivity Comparisons

StatsCan released a new analytical study today on the decline of Canadian labour productivity relative to the U.S., up to 2003. http://www.statcan.ca/Daily/English/080721/d080721a.htm Main findings are not surprising: Canadian business sector productivity has slipped relative to U.S. productivity (to 87% by 2003).  (We know it’s fallen significantly further than that since — Canadian labour productivity has hardly grown at all since […]

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Canada’s Resource Pigeon-Hole is Killing our Productivity

How about those productivity numbers that StatsCan released last week?  Wow: another nail in the coffin of Jim Flaherty’s claim that Canada’s economic fundamentals are in “great shape.”  There’s not much more fundamental in economics than how efficiently people produce stuff (except, of course, for what we do with what we produce – that’s even more fundamental).  And by that […]

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Labour Market Regulation and Productivity

http://www.ilo.org/public/english/employment/download/elm/elm07-4.pdf  A useful reference; a methodologically sophisticated attack on the core neo liberal belief that labour market regulation undermines efficiency. Why labour market regulation may pay off: Worker motivation, co-ordination and productivity growth by Servaas Storm & C.W.M. Naastepad ILO Economic and Labour Market Paper 2007/4 Abstract The impact of labour market regulation on labour productivity growth is ambiguous: on […]

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Wage and productivity growth debate (en francais)

PEF Steering Committee member Mathieu Dufour passed along this message: For the French readers amongst you, there is a debate currently going on in Le Devoir about the disconnect between wage and productivity growth. I first wrote an Op-Ed stating said disconnect and asking how long we were going to ask people to increase their productivity without paying them more. […]

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Minimum Wages Raise Productivity

The 2007 OECD Employment Outlook incorporates a study (Chapter 3) finding that higher minimum wages raise productivity. In fact, a sophisticated quantitiative study finds that an increase of 10 percentage points in the ratio of the minimum wage to the median hourly wage raises the level of labour productivity in the long-run by between 1.7 and 2.0 percentage points.  One possible explanatation cited […]

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New report links economic success, investment in training

http://www.ccl-cca.ca/NR/rdonlyres/F6226BEA-0502-4A2D-A2E0-6A7C450C5212/0/connecting_dots_EN.pdf Based on the Executive Summary, this report seems worth a read. It seems to go beyond the common rhetoric on the need for more ‘human capital development in a knowledge-based economy’ to take a serious look at economic returns to firms from training – though the scale of the suggested benefits seems rather high. I’ve always leaned to the […]

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