Background Notes for Cross Country Checkup
\nKevin Milligan
\nUBC Vancouver School of Economics
\nkevin.milligan@ubc.ca<\/p>\n
March 2, 2014<\/p>\n
—<\/p>\n
I’m scheduled to be a guest on Cross Country Checkup<\/a> with Rex Murphy at 2:30PST\/5:30EST on Sunday March 2, 2014. The topic is “Does the middle-class need a better deal?”.<\/p>\n [Update: you can hear me with Rex at 1 hour 32 minutes, here<\/a>.]<\/p>\n Here are my background notes, with references. <\/span><\/p>\n My basic argument summarizing most of this is laid out in an accessible way in <\/span>this<\/a> Maclean’s article.<\/span><\/p>\n Last week, there was an IRPP\/CLSRN conference on this topic featuring a great depth of research. The slides and audio from that conference is here<\/a>.<\/p>\n Q: What\u2019s going on with middle class jobs? * Canada has been fortunate to have some factors pushing against those trends: increased participation of women and the oil boom. Q: What about middle class incomes?<\/strong><\/p>\n * Median family incomes fell from 1980 to 1995, but grew from 1995 to 2011. The uptick is great news, but we have to understand what\u2019s driving these trends. * Male earnings on their own have been stagnating nationally. The national family income boost has been driven by women.<\/span><\/p>\n * Also, middle earners in oil boom provinces like Alberta and Newfoundland and Labrador have been doing very well. Ontario and BC have seen downright declines. * Top incomes (those in the top 1% or top 0.1%) grew tremendously since the mid 1980s. They’ve given up some of those gains since 2008–time will tell if trend recovers after recession. Q: Are the upward middle family income trends sustainable?<\/strong><\/p>\n * Need to think about the next<\/em> 25 years.<\/p>\n * Should we rely on Canadian women working more to drive us higher?<\/p>\n * Short of finding oil in Oshawa, we need to find solutions that work for all Canadians including the non-oil provinces.<\/p>\n * Need to think about ways to build an economy where prosperity is felt across the income distribution and across the country.<\/span><\/p>\n Q: What does the Statistics Canada wealth survey have to say about the middle class?<\/strong> * Overall net worth has grown–by 44.5% at the median from 2005 to 2012. This is not a bad thing. But not entirely a good thing either.<\/p>\n * Need to look underneath the headline–it is driven by real estate wealth. * If people don\u2019t cash out their real estate gains, this is just a paper gain for current homeowners.<\/p>\n * Not a sustainable source of societal wealth accumulation–next generation faces sky-high house prices. Great for today\u2019s middle class, but how does this help tomorrow\u2019s middle class?<\/p>\n Q: What are the policy solutions?<\/strong><\/p>\n * This is driven by deep global trends; not going to reverse with a finger-snap.<\/p>\n * Must resist temptation to try to turn back the trade\/technology clock to 1980. We still need growth; just would be better with growth that\u2019s more broadly felt both across the income distribution and across the country.<\/p>\n * We know that over last 30 years the best protection has been education: vastly different trends for different education groups. On its own may not be enough, but this must be part of conversation. * On the \u2018top 1%\u2019, best solutions are to ensure we have strong corporate governance so executive pay reflects performance. Also work hard to tighten tax loopholes so everyone pays their share. Background Notes for Cross Country Checkup Kevin Milligan UBC Vancouver School of Economics kevin.milligan@ubc.ca March 2, 2014 — I’m scheduled to be a guest on Cross Country Checkup with Rex Murphy at 2:30PST\/5:30EST on Sunday March 2, 2014. The topic is “Does the middle-class need a better deal?”. [Update: you can hear me with Rex […]<\/p>\n","protected":false},"author":21209,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-72","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/posts\/72","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/users\/21209"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/comments?post=72"}],"version-history":[{"count":20,"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/posts\/72\/revisions"}],"predecessor-version":[{"id":103,"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/posts\/72\/revisions\/103"}],"wp:attachment":[{"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/media?parent=72"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/categories?post=72"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.ubc.ca\/kevinmilligan\/wp-json\/wp\/v2\/tags?post=72"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n* 30 year trend across industrialized countries: Hollowing out of job market; middle skill jobs have been shrinking. Technology is changing the job market irreversibly.
\n[Source: \u00a0See it in one graph here<\/a>.\u00a0Goos Manning Salomons AERPP 2009<\/a>\u00a0or David Autor 2010<\/a>\u00a0or Autor’s keynote to IRPP\/CLSRN conference: slides<\/a> video<\/a>. Evidence on Canadian job polarization from Green and Sand<\/a>.]<\/p>\n
\n[Source: for resource boom, see Fortin-Lemieux 2014<\/a>. For women, see CANSIM 202-0101 graphed here<\/a> on slide 4.\u00a0]<\/p>\n
\n[Source: See my Maclean’s article here<\/a>, or see CANSIM numbers graphed\u00a0here<\/a>\u00a0on slide 4. \u00a0Stephen Gordon provides an alternative view on Maclean’s here<\/a> and here<\/a>.]<\/p>\n
\n[Source CANSIM 202-0101, graphed here<\/a>]<\/p>\n
\n[Source: see CANSIM 204-0002 numbers graphed\u00a0here<\/a>\u00a0on slide 6. 1982-2010 trends graphed here<\/a>. Long-run Canadian trends are in Veall 2012<\/a>. Global trends are in Atkinson, Piketty Saez 2010<\/a>. Graph the global trends yourself using the Paris School of Economics Top Incomes Database<\/a>.]<\/p>\n
\nStatistics Canada release on 2012 wealth survey here<\/a>.<\/p>\n
\n[See my Maclean\u2019s article here<\/a>\u00a0for expansion and sources for these arguments.]<\/p>\n
\n[source: See Bourdarbat, Lemieux, Riddell 2010<\/a>\u00a0for long-run returns to education, or Frenette 2014<\/a>. Startling trends in US education returns from David Autor: graph<\/a>, full slides<\/a>. Some slides for a forthcoming paper by Foley and Green are here<\/a>; they challenge notion that education alone will solve the problems. Beaudry Green and Sand 2013 <\/a>suggest a ‘reversal’ in 2000, as higher skill workers moved down job ladder and crowded out lower skill workers. But\u00a0Lindley and Machin 2013<\/a>\u00a0find that in 2000s all the reversal did was slow the\u00a0growth<\/em>\u00a0of the skill wage gap.]<\/p>\n
\n[Source: I expand on these arguments in this presentation here<\/a>. I make some tax system suggestions in Maclean’s here<\/a>,]<\/p>\n","protected":false},"excerpt":{"rendered":"