Corak: What will COVID Mean for the Future of Fiscal and Social Policy? Temporary Foreign Workers aspects

2022/06/08 Leave a comment

From a recent presentation by Corak:

The federal government was very attentive to a whole host of concerns that can only be charitably described as poor public policy. These include repeated extensions of the CEWS, intergenerational transfers of capital gains, and most recently campaigns for extensions and forgiveness of loans taken through the Canada Emergency Business Account (CEBA).

There is an important discussion to be had about the moral hazards associated with these changes, and their consequences for a dynamic and efficient small business sector. Indeed, all of this is piled onto a corporate tax structure that is increasingly making small businesses a tax haven and putting a break on productivity growth.

But the coup de grace in this unfortunate policy evolution is the government’s acquiesce to the demand for an expanded Temporary Foreign Worker program. Employers now have the opportunity to hire up to one-fifth, and in some cases 30 percent, of their low-wage workforce through the Temporary Foreign Worker program.

This represents a major wage subsidy, even if it is not recorded as an expenditure in the government’s books. It is just the opposite of what policy directed to an inclusive labour market should be doing. Low wage workers, those who have a tenuous foothold in the labour market either because they themselves are recent immigrants, have a disability, or are young, will likely see more limited wage growth and job opportunities as a result of this policy change.

This change may also potentially shut off the possibility of upgrading employment and human resource practices in the care economy, particularly in Long-Term Care facilities and in early childhood care. The pandemic illustrated that the use of contingent and itinerant work arrangements in long-term care homes had devastating and shameful consequences. The challenge for a policy maker wishing to promote an inclusive labour market is to transform this sector into a “craft” based economy, with upskilling of workers who offer community and family based care and support.

An unfortunate legacy of COVID on public policy directed to employers is the threat of growing inefficiencies and inequities as a result of subsidies that cannot be rationalized by any sort of market failure.

Post COVID policy incoherence threatens an inclusive labour market

Public policy may continue to make determined and important changes in a progressive and inclusive direction, and even take steps toward a tighter social safety net that some will appreciate as a basic income.

But other choices bring the very goal of a “strong and inclusive labour market” into question and in the long term threaten the sustainability of more generous transfers to individuals. The labour market will be more inefficient and inequitable because of sustained subsidies to small business and increased reliance on temporary foreign workers. 

And more polarization and inequality of jobs, wages, and market incomes will in turn make the maco-economy more unstable and more challenging to manage.

What will COVID mean for the future of fiscal and social policy? The future is unclear not because of inherent uncertainty, but rather because of explicit choice and the incoherence that it has engendered.


Source: What will COVID Mean for the Future of Fiscal and Social Policy?

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Corak: COVID-19 is not the great leveller. It’s the great revealer

2020/04/17 Leave a comment

Great and accurate commentary by Corak:

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 which the entire government response rests, is that the COVID-19 economic shock will be temporary. The goal is to freeze the economy until the winds of illness pass by, allowing us to start again where we left off. Public policy is focused on the challenge of adjustment and rebound.

But Statistics Canada’s look into the socially distanced economy also reveals longstanding inequalities that have been growing wider and wider for decades.

For many families, the bottom end of wage inequality means an insecure standard of living and lower prosperity for the next generation.

The usual economic parable claims that this is the price paid to foster growth, and eventually more prosperity for everyone. We need to adjust to win.

The market has sent a signal: tool up, get better skilled, move elsewhere and move onward. The next and better job is just around the corner!

And after all, if you have a job, even if you need more than one to stay afloat, there is always a sense of hope, a shred of dignity, the aspiration of a better tomorrow. Income inequality is easier to ignore in a full employment economy.

But the great revealer has arrived in the form of a virus, its economic fallout showing almost perfectly the divides between those who are vulnerable and those who are not.

Now, some of us do work that is not public-facing.

Some of us do work that is flexible and supported by technology and computers.

And of course some of us do work that gets us an income well above average, offering security, health, a home with space, and a comfortable family life.

This work gives us an economic immunity.

What is the big deal about working at home if you normally spend half your time working from an airplane seat?

But underlying Statistics Canada’s report are some dramatic differences.

The employment change among managers and those working in professional, scientific, or technical jobs was “decimal point dust,” but 300,000 people working in accommodation and food services lost work, a fall that wiped out 20 years of growth.

The foot soldiers in this very first economic battle against COVID-19 were the young and women, those who work in part-time and temporary jobs, with no union contracts and lower wages. Students and those who were already unemployed were also out of luck finding their next job.

Now that we are collectively facing a health risk that is spreading across space, we’ve been given the opportunity for empathy with many people who individually confront risks that repeat over and over again during the course of their lives, an accumulation of bad draws over time that leads to lower and more precarious incomes, housing that is less stable and of lower quality, families that are less secure.

In much of this there is no question of merit and just desert, it’s just bad luck.

It is nice for premiers and prime ministers to thank truck drivers and grocery store clerks for their essential work, but it will be hypocrisy of the highest order for our governments to only hope to start up again where we left off.

Inequality has been robbing many Canadians of security, prosperity and dignity for decades. That is what COVID-19 reveals.

No, we don’t just have an adjustment problem. We have — as we have long had — an inequality problem.

Source: ContributorsOpinionCOVID-19 is not the great leveller. It’s the great revealer

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Corak: Ottawa is struggling to be a just-in-time government

2020/04/01 Leave a comment

Good commentary by Miles Corak and the need to rebalance between policy development and service delivery. The initial idea behind Service Canada was precisely to do just that, having policy being service and citizen-centric rather than stove-piped by department and program. Too risky an approach for government, and most DMs and other senior officials make their name and career based upon their role in policy development rather than service delivery, with the inevitable results of some major screw-ups like the Phoenix pay system.

We shall see how the government manages to deliver all of the COVID-19 measures, as I suspect, like Corak, that they will be judged on that basis. Of course, a few years later, evaluations and audits will highlight some of the accountability and integrity issues that arose with the new and expanded programs rushed out the door (given time being of the essence over full due process and safeguards):

Big government rode 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 from the COVID-19 crisis is that 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 matters, and whether it is François Legault, Doug Ford, Jason Kenney, John Horgan, Naheed Nenshi, John Tory or Justin Trudeau, Canadians feel they are all passing the test.

Opinion polling shows that strong majorities see their leaders as doing a good job responding to COVID-19. And it’s impressive, their sensibility to consult, their conviction to act. Now, when we need them, they’ve all shown up, just in time.

But we can’t be governed by character alone. Good governance needs an infrastructure that can deliver, and thank goodness Canadians can also count on a professional public service. But at the same time, we fear its muscles can’t flex in real time.

The biggest stumble of the past week was Ottawa’s overreaching ambition in the first draft of Bill C-13 – the COVID-19 Emergency Response Act – an attempt to skirt parliamentary oversight and seize control of taxing and spending for two years. Not immediately tasteful, not in character – and certainly not contributing to the we-are-in-it-together spirit that is crucial for good governance and success.

It was probably driven more by insecurity than partisanship, springing from having to look through the veil of uncertainty that has fallen over Ottawa. Staring into the mirror and seeing no reassuring reflection, Finance Minister Bill Morneau wished for a pot of gold, just in case, you never know, down the road, we may need it.

Insecurity about a fluid situation, and about how quickly programs can be delivered, flows out of clogged government plumbing, a hard constraint on Big Think. For years we’ve neglected, cut, denigrated, and now the public service has a tough time doing just-in-time.

Take, for example, Employment Insurance, that grand social insurance scheme born from the disaster of the Great Depression, intended to offer income support to all in need, to insure against the great social risks we collectively face – risks that would bankrupt private insurers in no time. How is it performing during a collective crisis of the very kind it was intended to address?

It is straining, with computer code written in the 1980s running its servers, processing power and devoted personnel stretched to the limit, service centres now shut down. The public service is doing the best it can with old plumbing.

Ottawa mandarins often muse about an “all of government approach,” a busting across the silos of different ministries to address all aspects of a policy challenge. But the biggest silos of all have never been breached, those between policy development and service delivery. And now the delivery plumbing is conditioning the choices that Big Thinkers can make.

What is also clear from the COVID-19 crisis is that we should always be investing and innovating in public service delivery, something that’s easy to ignore in normal times.

There is no doubt that the income-support programs the federal government moved quickly out of the drawing room and into legislation last week were designed with an eye, not simply to whether they were big enough, but to how they would be delivered. The cheques won’t be in the mail for weeks. In a time of pandemic, that’s a lifetime.

Our governments have to think big, but they can only implement incrementally, a couple of quick steps forward, one back. Events are moving too fast, capacity is too limited, for Canadians to expect otherwise, even if what they really need is both big and just-in-time government.

When Mr. Trudeau’s team first came to power, they were enamoured with the idea of governing with data. Measure outcomes, set targets, recalibrate in the face of results and move forward with a “there’s more to do” attitude. But lags in information and delivery make all that fall short.

There is always a big gap between intention and result, even more so in times of crisis, and that gap has to be filled with the trust that character instills in partners and citizens.

Trust gives us the assurance that the cheque is indeed in the mail, and character, now more than ever, needs to deliver. It can’t stumble too many times before trust rides away.

Source: Ottawa is struggling to be a just-in-time government: Miles Corak

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A tale of two Canadas: Where you grow up affects your income in adulthood – Corak

2017/06/26 Leave a comment


Good in-depth coverage of Miles Corak’s work on intergenerational mobility. Paras on immigration of note:

Many parts of Canada’s income-mobility map are shaped by immigration: People who’ve arrived in Canada in the past 10 to 15 years tend to have lower incomes and higher poverty rates than average Canadians. But what this map shows – and other studies verify – is that their children are rising from the lowest to the highest fifth of the income scale at very high rates.

“It is well established that it is the first generation in Canada – those born abroad – that takes the hit and has the hardest time in establishing themselves in the labour force,” says Don Kerr, a sociologist at King’s University College at the University of Western Ontario. “But clearly we see that their children are eventually doing much better than they did, armed with a Canadian education and Canadian credentials.” This is especially true in southern Ontario, which receive the largest share of Canada’s immigration, and whose very high mobility levels, Dr. Kerr says, can be attributed in good part to the fast rise of newcomers: “Here we are seeing the success of the second generation in Canada.”

Source: A tale of two Canadas: Where you grow up affects your income in adulthood – The Globe and Mail

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The winners and losers of globalization, Branko Milanovic’s new book on inequality answers two important questions: Corak

2016/05/24 Leave a comment

Miles Corak’s review of Branko Milanovic’s Global Inequality: A New Approach for the Age of Globalization makes interesting reading, particularly  the section on immigration:

If we really can get into this global mindset that he is asking us to adopt, then we might think more creatively, and perhaps less dogmatically, about a series of challenges that we face as citizens of individual nations. There are a number of examples in the last chapter, but perhaps the most striking deals with citizenship and migration, examples that cut at the very core of the approach.

There remains a huge boost to incomes depending upon where an individual lives, and this creates big incentives for migration from poorer to richer countries. American politics has long been struggling with meaningful immigration reform, driven by the large inequalities between countries but also formed, informed, and misinformed by the large inequalities within the country.

The refugee crisis now afflicting Europe is partly geopolitical but also deeply economic. Better lives are to be had if one can make it to Germany or Sweden. “Physical walls between jurisdictions,” Milanovic tells us, “are being built, in part, because there is a huge financial wall between being and not being a citizen of a rich country.” In his view, this is because our national politics ties us to a binary notion of citizenship. He speculates that Americans and other citizens of the rich countries might be more amenable to immigration if there were what he calls an intermediate level of citizenship, a level that would have less economic value than full citizenship because it would entail higher taxation, less access to social services, or perhaps an obligation to return to the country of origin.

In other words, put aside the idea of a “path to citizenship” as a right. Americans have tolerated a de facto inferior form of residency, but in a way that keeps many immigrants and their children in the shadows. Milanovic is advocating bringing them out of the shadows through, for example, a legally administered program for temporary foreign workers, giving migrants the right to work in the country but also the obligation to return home.

This is something actually done in Canada, but the policy went afoul politically because it made the competition for jobs between natives and migrants more transparent. It may be a policy particularly appropriate to the European Union, where the walls are something more than metaphorical. This is context that Milanovic probably has in mind. But it is hard to imagine how much traction a temporary foreign-worker program, or the other variants he suggests, would have in the U.S., because the perception that immigrants compete for jobs and lower wages of the native-born will still bite.

Indeed, at the same time, Milanovic makes clear that he feels the “great middle-class squeeze” is not over, and will likely lead to more polarization in rich societies and their politics. This will not only ensure immigration policy will continue to be challenging, it may also be all the more troubling for policy directed to equality of opportunity.

In the coming years, the observed differences in the skills and abilities between the top echelons and everyone else will not be that great, with chance, family background, and inheritances playing a bigger role in allocating incomes. “The new capitalism will resemble a big casino, with one important exception: those who have won a few rounds (often through being born into the right family) will be given much better odds to keep on winning.” If this is so, then it will be harder and harder to sustain the story that inequality is somehow the precursor of opportunity, offering rewards and incentives for the more productive among us to contribute to higher growth and incomes for all. And the status quo will become politically less and less sustainable.

Source: The winners and losers of globalization, Branko Milanovic’s new book on inequality answers two important questions | Economics for public policy

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Building a more inclusive society requires a conversation about inequality: Corak

2015/07/29 Leave a comment

Good thoughtful discussion on building an inclusive society by Miles Corak. One of my favourite parts:

“Social inclusion” is a slippery term, and it certainly does not have a distinct meaning in the social sciences in a way that at least I, as an economist,  would feel comfortable drawing implications for public policy.

It helps me to reflect on another term that is sometimes also used to frame public policy: “assimilation”.

For example, assimilation is used in some countries to refer to policies addressed to immigrants. It frames policy discourse in a way that leads to a focus on the shortcomings of migrants. There is a sense of a clear and distinct “mainstream” to society, or to the economy, and migrants are lacking in the skills, language, or even in the attitudes, religion, and culture necessary to fit into this mainstream. They need to change.

This is overtly clear in the way that some extreme groups argue against the very presence of migrants, or accommodations toward them. If this perspective rubs many of us the wrong way it is because at some level we recoil from the underlying assumption of “assimilation”: that the mainstream is clear, fixed, socially preferred; that the task for groups defined as the “other”—be they migrants, those with low-income or without work, those with physical or mental disabilities, or those of colour—is to adjust, to adapt, to assimilate, and indeed to ultimately identify with that mainstream.

It surely does not take much second thought to recognize that barriers to assimilation may be structural, reflecting overt discrimination in access to fundamental resources that are the basis for full participation in society: access to education, health care, income security, and even to jobs for which migrants may well be perfectly qualified but never hired because of skin colour, accent, or simply the spelling of their last names.

In other words, if perspectives like this rub many of us the wrong way it is because we believe there is a reciprocal obligation, something to be negotiated, something reflecting a partnership in the building of society in which all parties are treated with equal respect, and are in turn changed by the relationship.

This has to be at the core of what we mean by “inclusion” if it is to be a helpful framework. Inclusion embodies the idea that identity is something to be continually re-negotiated as successive waves of minority groups enter into conversation with the majority.

So in this way conversation is not just an excellent metaphor for the meaning of inclusion, it is also a vital mechanism to achieve it. It is through conversation that we can respectfully negotiate the terms of a partnership, but at the same time we appreciate conversation for its own sake, are not threatened or dissatisfied by the fact that it is open-ended, indeed this is what reassures and enriches.

But if building an inclusive society through conversation is to be sincere and productive, it has to be done between partners who demonstrate mutual respect, and be capable of freely engaging; partners with a clear sense of others, but also of themselves. It seems to me that this sort of capacity or capability is also at the core of what we mean by “inclusion”.

Building a more inclusive society requires a conversation about inequality | Economics for public policy.

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