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Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

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More flexible eligibility and financing rules for EI a better way to help jobless


There has to be a better way of financing Employment Insurance (EI), one of Canada’s most important income security programs.

In principle, EI is a social insurance program financed by employer and employee premiums rather than from general tax revenues.

That is as it should be since only employees qualify for benefits, and since both contributions and benefits are related to the level of individual earnings, up to a maximum based upon average earnings.

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Japan can look to Quebec for a solution to its work force problem


Back in January, we touched on the subject of Japan’s long road toward reform. As a reminder, the Japanese government’s plan, usually called “Abenomics,” is made up of three parts or “arrows”: monetary stimulus, fiscal stimulus and structural reform. At this point, the first two arrows have been shot and seem to have hit their targets. However, as has been stressed countless times, the last arrow is by far the most important and complex of the three.

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Forget Ottawa. Only the provinces can dismantle their trade barriers


Mosquitoes. Icy roads. Lineups at Tims. These are just a few things that most Canadians hate but have learned to tolerate. Annoying but inevitable.

Maybe we need to add to this list the barriers to interprovincial commerce. Going all the way back to Confederation, provincial governments have made various overtures at reducing these barriers to trade, investment and labour flows. Progress has been underwhelming.

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If I had $100-billion ... How to restore Ottawa’s fiscal health


Many of us know the catchy tune by the Canadian band The Barenaked Ladies, If I Had A Million Dollars, but how about multiplying it by 100,000 times? Each year, approximately $100-billion leaks out of the federal government’s revenue-gathering system, more or less unseen by the public. As the song says, that amount of money would buy a lot of Kraft Dinner.

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Canada’s labour data fail to shine proper light on self-employed


Assuming the figures are still valid as you read this, Statistics Canada’s August 2014 Labour Force Survey (LFS) release finally drew attention to Canada’s increasingly DIY labour market.

It took no less than a record monthly self-employment bump of 86,900 to do so – nearly 1.5 times the previous (post-1976) record of 62,000 (revised up from 56,000) that was reported in the May, 2007, release. Which is unfortunate, since self-employment has had a far greater impact on the Canadian labour market in recent years than the headline figures suggest.

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Why textbooks are so expensive


Classes started last week at many Canadian colleges and universities, and thousands of first-year students were probably shocked to see such high textbook prices. Why does a 500-page textbook in economics or cell biology or calculus cost $150, and sometimes much higher, while similarly sized “trade” books cost only $40 or less?

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Government debt-financed investment is the best path to robust growth


The gloomy view that the global economy faces a prolonged period of slow growth and high unemployment holds increasing sway among mainstream economists. A new e-book from the Centre for Economic Policy Research (CEPR), Secular Stagnation: Facts, Causes, Cures, edited by Coen Teulings and Richard Baldwin, includes interesting contributions from such luminaries as Paul Krugman, former U.S. Treasury secretary Larry Summers and International Monetary Fund chief economist Olivier Blanchard.

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The case for spending on Central Canada’s infrastructure


Quebec’s Philippe Couillard and Ontario’s Kathleen Wynne are forging an interesting alliance in Central Canada, one that represents the country’s largest economic region and a population of over 20 million.

Both premiers are joining their voices in tackling the issue of the federal government’s share of infrastructure funding. In short, they claim that around 5 per cent of gross domestic product should be invested annually to build and maintain proper public infrastructure and, consequently, that Ottawa should increase its investments to 2 per cent of GDP, thus keeping it stable and predictable.

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