Economics

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Browsing Economics by Author "Skuterud, Mikal"

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    The Labour Market Integration of Immigration and Their Role on Innovation
    (University of Waterloo, 2017-12-20) 张, 珏; Skuterud, Mikal
    This thesis contains three chapters evaluating the role of labour market skills in determining immigrants' labour market integration and Canada's innovation rate. In Chapter 1, I estimate how the impact of entry economic conditions on immigrants' labour market outcomes varies by the versatility of their skills. Skill versatility is measured using information on the sectoral concentration of native-born workers with a particular education field and level. Entry economic conditions are measured using city-level unemployment rates among native graduates from a similar education field and level. Since immigrants' location choices can be endogenous to geographic local economic conditions, I address the endogeneity of immigrants' location choices by exploiting the historical settlement patterns of immigrants from the same countries of origin. I find that immigrants suffer a 5 to 8 percent decline in their annual earnings when there is a one percentage-point increase in entry unemployment rates. When I incorporate the skill versatility measure in the estimation, the earnings loss is mitigated by 1 to 3 percentage points, if there is a one standard deviation increase in immigrants' skill versatility level. This effect is less evident for highly educated immigrants and it may be due to their being more likely to have pre-arranged employment before landing. I also find that city-level onward migration is more likely for immigrants who face unfavourable labour market conditions at entry, and movers do fare better than stayers conditional on initial setbacks. Meanwhile, immigrants' geographical mobility is found to be strengthened to some extent by their skill versatility. Chapter 2 examines the effect of changes in skilled-immigrant population shares in 98 Canadian cities between 1981 and 2006 on per capita patents. The Canadian case is of interest because its `points system' for selecting immigrants is viewed as a model of skilled immigration policy. Our estimates suggest unambiguously smaller beneficial impacts of increasing the university-educated immigrant population share than comparable U.S. estimates, whereas our estimates of the contribution of Canadian-born university graduates are virtually identical in magnitude to the U.S. estimates. The modest contribution of Canadian immigrants to innovation is, in large part, explained by the low employment rates of Canadian STEM-educated immigrants in STEM jobs. Our results point to the value of providing employers with a role in the immigrant screening process. Lastly, in Chapter 3, using inventors' names to identify their ethnicity and Canadian Census and NHS data to estimate ethnic populations, we estimate patenting rates for Canada's ethnic populations between 1986 and 2011. The results reveal higher patenting rates for Canada's ethnic minorities, particularly for Canadians with Korean, Japanese, and Chinese ancestry, and suggest that immigrants accounted for one-third of Canadian patents in recent years, despite comprising less than one-quarter of the adult population. Human capital characteristics, in particular the share with a PhD and the shares educated and employed in STEM fields, account for most of the ethnic-minority advantage in patenting. Our results also point to larger patenting contributions by foreign-educated compared to Canadian-educated immigrants, which runs counter to current immigrant selection policies favouring international students.
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    The Relative Performance of International Students and Their Academic Program Choices
    (University of Waterloo, 2021-01-18) Chen, Zong Jia; Skuterud, Mikal
    Canada is increasingly looking to international students as a source of postsecondary tuition revenues and new immigrants. In Chapter 1, we examine the relative course grades of international undergraduate students in an Ontario university with a large and growing foreign student presence. We identify grade gaps across fields of study, which appear to primarily reflect admission errors from less predictive secondary school grades. While the gaps appear related to English-language proficiency, they are larger among graduates of Canadian secondary schools and in upper- than in first-year courses. Our estimates also suggest that relative foreign student quality has improved over time, despite increasing foreign enrolment. The academic programs that students choose to pursue have strong implications for their career prospects. In Chapter 2, I shed light on students’ academic program choices by examining how co-ethnic peers influence their decisions to change programs during the course of their undergraduate studies. Examining data from a publicly-funded Ontario university with an ethnically diverse student population, I find that students are highly ethnically concentrated within academic programs at the time of their initial enrolment. Moreover, nearly one-quarter of all students change programs at least once during their studies and these program changes further increase the ethnic concentration of students within academic programs. Assuming a model in which students prioritize their grades over co-ethnic peers, the presence of more co-ethnic peers is found to significantly increase the probability of a program change. This suggests that the ethnic concentration of students across programs at the university, which appears to increase over time, may be academically and socially efficient. International students are considered to be the best source of immigrants. In chapter 3, we compare the labour market performance of former international students (FISs) through the first decade of the 2000s to their Canadian-born-and-educated (CBE) and foreign-born-and-educated (FBE) counterparts. We find FISs outperform FBE immigrants by a substantial margin, but underperform CBE graduates from similar postsecondary programs. We also find evidence of a deterioration in FIS outcomes relative to both comparison groups. We argue that this deterioration is most consistent with a quality tradeoff as the supply of international students has not kept pace with the growth in demand.
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    Three Essays in Labour Economics and Public Finance
    (University of Waterloo, 2016-04-27) Legree, Scott; Skuterud, Mikal
    This three-chapter thesis evaluates the potential for two major government policy levers to influence income inequality in Canada: the tax and transfer system, and the labour relations framework. The first two chapters are concerned with estimating how tax-filers respond to changes in tax rates, and the extent to which governments are limited in raising income tax rates on higher income individuals to fund transfers to lower income individuals. The final chapter examines the possibility that governments can increase the bargaining power of labour unions through changes in labour legislation, and in turn, reduce wage inequality within the labour market. The elasticity of taxable income measures the degree of responsiveness of the tax base to changes in marginal tax rates. Recent Canadian estimates of this elasticity have found moderate elasticities for earners in the top decile, and high elasticities for earners in the top percentile (for example Milligan and Smart (2015) and Department of Finance (2010)). In Chapter 1, I explore the underlying mechanisms that generate the relatively higher estimates at the top of the income distribution. Using the Longitudinal Administrative Databank (LAD), I estimate elasticities for several sub-components of taxable income, such as earned employment income and total income. In contrast to other research, I find modest elasticities of taxable income, even within the top percentile. I demonstrate that elasticities estimated using the Gruber and Saez (2002) specification are sensitive to choices of weights. In Chapter 1, I find small elasticities not only for total and taxable income, but also for another very important income concept: employment income. Specifically, I find employment income elasticites of less than 0.07 for all income deciles. These elasticities, however, represent average estimates for heterogeneous workers who face different constraints and who have different incentives to respond to changes in tax rates. In Chapter 2, therefore, I estimate elasticities for different types of workers by dividing the sample by gender and by attachment to the labour force. Using the Survey of Labour and Income Dynamics (SLID), a survey with detailed information on labour hours and job characteristics, I find higher elasticities for female workers and for workers with a weaker attachment to the labour force. I test for robustness of the estimates by varying the income increment used to calculate the marginal effective tax rates (METRs), as well as varying the number of years between observations. A second-order benefit of Chapter 2 is it serves as a robustness check on the results of Chapter 1. That is, we reproduce the elasticity estimates for total income and taxable income from Chapter 1 with a different dataset, and find similar results. Chapter 3 turns to the potential role of labour relations reforms to influence Canadian income inequality. Labour relations policy in Canada, studied extensively for its impact on unions, has not been studied more generally for its role in income inequality. In this chapter, I provide evidence on the distributional effects of labour relations’ reforms by relating an index of the favorableness to unions of Canadian provincial labour relations laws to changes in industry-, occupation-, education-, and gender-specific provincial unionization rates between 1981 and 2012. The results suggest that shifting every province’s 2012 legal regime to the most union-favorable possible (a counterfactual environment) would raise the national union density by no more than 8 percentage points in the steady state. I also project the change in union density rates that would result in the counterfactual situation for several demographic subgroups of the labour force. While there is some evidence of larger gains among blue-collar workers, the differences across these groups are small and in some cases suggest even larger gains among more highly educated workers. The results suggest reforms to labour relations laws would not significantly reduce labour market inequality in Canada.