The Impacts of Minimum Wage Increases on the Canadian Economy Staff Analytical Note 2017-26 Dany Brouillette, Daniel Gao, Olivier Gervais, Calista Cheung This note reviews the channels through which scheduled minimum wage increases over the coming years may affect Canadian economic activity and inflation and assesses their macroeconomic impacts. From reduced-form estimates of direct minimum wage pass-through, we find that consumer price index (CPI) inflation could be boosted by about 0.1 percentage point (pp) on average in 2018. Content Type(s): Staff research, Staff analytical notes Topic(s): Labour markets, Recent economic and financial developments JEL Code(s): E, E2, E24, J, J2, J21, J22, J23
Wage Dynamics and Returns to Unobserved Skill Staff Working Paper 2017-61 Lance Lochner, Youngmin Park, Youngki Shin Economists disagree about the factors driving the substantial increase in residual wage inequality in the U.S. over the past few decades. We identify and estimate a general model of log wage residuals that incorporates: (i) changing returns to unobserved skills, (ii) a changing distribution of unobserved skills, and (iii) changing volatility in wages due to factors unrelated to skills. Content Type(s): Staff research, Staff working papers Topic(s): Econometric and statistical methods, Labour markets JEL Code(s): C, C2, C23, J, J2, J24, J3, J31
November 7, 2017 Understanding Inflation: Getting Back to Basics Remarks Stephen S. Poloz CFA Montréal and Montreal Council on Foreign Relations Montréal, Quebec Governor Stephen S. Poloz discusses how recent weak inflation in Canada and other economies can be explained by fundamental factors. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Econometric and statistical methods, Economic models, Inflation and prices, Labour markets, Monetary policy, Monetary policy implementation
Downward Nominal Wage Rigidity in Canada: Evidence Against a “Greasing Effect” Staff Working Paper 2017-31 Joel Wagner The existence of downward nominal wage rigidity (DNWR) has often been used to justify a positive inflation target. It is traditionally assumed that positive inflation could “grease the wheels” of the labour market by putting downward pressure on real wages, easing labour market adjustments during a recession. Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Labour markets JEL Code(s): E, E2, E24, E5, E52
July 12, 2017 Monetary Policy Report Press Conference Opening Statement Opening statement Stephen S. Poloz, Carolyn A. Wilkins Ottawa, Ontario Governor Stephen S. Poloz discusses key issues involved in the Governing Council’s deliberations about the policy rate decision and the MPR. Content Type(s): Press, Speeches and appearances, Opening statements Topic(s): Inflation and prices, Interest rates, Labour markets, Monetary policy, Monetary policy implementation, Recent economic and financial developments
Labour Force Participation: A Comparison of the United States and Canada Staff Analytical Note 2017-9 James Ketcheson, Natalia Kyui, Benoit Vincent This note explores the drivers behind the recent increase in the US participation rate in the labour market and assesses the likelihood of a similar gain in Canada. The growth in the US participation rate has largely been due to a pickup in the participation of prime-age workers following a post-recession decline. Content Type(s): Staff research, Staff analytical notes Topic(s): Labour markets, Recent economic and financial developments JEL Code(s): E, E2, E24, J, J2, J21
Wage Growth in Canada and the United States: Factors Behind Recent Weakness Staff Analytical Note 2017-8 Dany Brouillette, James Ketcheson, Olena Kostyshyna, Jonathan Lachaine This note examines the relatively subdued pace of wage growth in Canada since the commodity price decline in 2014 and assesses whether the weakness is attributable to cyclical (e.g., labour market slack) or structural factors (e.g., resource reallocation and demographic change). Content Type(s): Staff research, Staff analytical notes Topic(s): Labour markets, Recent economic and financial developments JEL Code(s): E, E2, E24, J, J3, J30
June 12, 2017 Canadian Economic Update: Strength in Diversity Remarks Carolyn A. Wilkins The Associates of the Asper School of Business Winnipeg, Manitoba Senior Deputy Governor Carolyn A. Wilkins talks about encouraging signs that growth is broadening across Canada’s regions and sectors. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Inflation and prices, Labour markets, Monetary policy, Recent economic and financial developments, Regional economic developments, Sectoral balance sheet
Downward Nominal Wage Rigidity, Inflation and Unemployment: New Evidence Using Micro‐Level Data Staff Analytical Note 2017-6 Dany Brouillette, Natalia Kyui Recent evidence suggests that the extent of downward nominal wage rigidity (DNWR) in the Canadian labour market has risen following the 2008–09 recession (see Brouillette, Kostyshyna and Kyui 2016). Content Type(s): Staff research, Staff analytical notes Topic(s): Econometric and statistical methods, Inflation and prices, Labour markets JEL Code(s): E, E2, E24, E3, E31, J, J3, J30
Downward Nominal Wage Rigidity Meets the Zero Lower Bound Staff Working Paper 2017-16 Robert Amano, Stefano Gnocchi We add downward nominal wage rigidity to a standard New Keynesian model with sticky prices and wages, where the zero lower bound on nominal interest rates is allowed to bind. We find that wage rigidity not only reduces the frequency of zero bound episodes but also mitigates the severity of corresponding recessions. Content Type(s): Staff research, Staff working papers Topic(s): Inflation targets, Labour markets, Monetary policy framework JEL Code(s): E, E2, E24, E3, E32, E5, E52