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Raise your country’s GDP with a few extra beers

Chris Bodnar enjoys a drink on the crowded Earl’s Kitchen and Bar patio in Toronto.

JENNIFER ROBERTS/The Globe and Mail

Beer is good for the economy

The next time you stick around the pub for one more round even though you think maybe you shouldn't, don't consider it a failure of your will power. Think of it as your good deed to the Canadian economy. You're not getting loaded, you're helping create wealth and build schools.

The Conference Board of Canada tells us in a report released this week that every dollar of beer sales in this country generates $1.12 toward our gross domestic product (GDP). (That's because beyond beer sales, there is also the investment in the beer production, transportation and distribution industry that support the beer economy and is fuelled by profits from beer sales, not to mention disposable income for people employed in the industry.)

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Beer consumption accounts for 0.9 per cent of GDP, and the industry is responsible for employing, directly and indirectly, 1 per cent of all Canadian workers. Beer also generates nearly $6-billion a year in tax revenues for various levels of government; for every dollar spent on beer, 44 cents end up in government coffers, one way or another.

Is Fed guidance due for a reset?

A couple of papers from U.S. Federal Reserve staffers suggest that the U.S. central bank is asking itself whether it chose the best thresholds for unemployment and inflation in its guidance statements that set out when it would consider tightening interest rates.

Nearly a year ago, the Fed began stating that is would need to see unemployment at or below 6.5 per cent before it would consider raising its policy rate, so long as inflation expectations were no higher than 2.5 per cent. But this week, in a research paper presented at an International Monetary Fund conference in Washington, William English – who, as director of the Fed's monetary affairs division, is essentially Fed chairman Ben Bernanke's top monetary policy adviser – suggests that a lower unemployment threshold of 5.5 per cent might be more efficient in terms of promoting healthy economic expansion.

A separate paper at the same conference, co-written by David Wilcox, the Fed's director of research and statistics, argues that because of the profound effect the financial crisis and Great Recession had on labour force participation and capital investment, the Fed could afford to keep its monetary policy looser for longer, and allow inflation to temporarily drift higher than the central bank's normal preferred range.

These are both deeply academic and theoretical papers; it would take several big leaps indeed to go from here to envisaging the Fed actually revising its forward guidance, something it surely won't do lightly. Still, the public presentation of the two papers tell us that this is a serious conversation around the Fed's water cooler.

Women out-earn men in the part-time workplace

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It's no secret that women still don't earn as much as men in the workplace. As of 2011, the average female worker in Canada still made only two-thirds of what the average male earned. But there is one segment of the work force in which women have much better earnings power: Part-time jobs.

A new report from the U.S. Bureau of Labor Statistics (which was highlighted in The New York Times Economix blog this week) shows that for jobs with part-time work weeks ranging from five to 35 hours, the median wage for U.S. women in 2012 was consistently higher than that for men. Over all, the median U.S. part-time wage for females was 4.4 per cent higher than for males. (Women are also twice as likely to work part-time as men are.)

In Canada, women aren't doing quite as well in the part-time market. Statistics Canada data show that in 2011, the median part-time wage for women was 95 per cent of that for men.

Millionaire U.

If you plan to be a millionaire, start with the right school.

British wealth management publication Spear's and consulting firm WealthInsight have published a study ranking the world's universities by the number of millionaire alumni they have. Harvard tops the list (both the main university and its business school), followed by three more U.S. schools: Stanford, the University of California and Columbia. The top non-U.S. school for millionaires is Britain's Oxford University.

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Out of the top 100 millionaire-producing schools in the world, 61 are in the United State, eight are in France, six are in Britain and six are in Australia. Canada has five schools in the top 100: the University of Toronto (37th), McGill University (40th), the University of British Columbia (56th), Queen's University (61st) and the University of Western Ontario (79th).

And what did most millionaires study while in university? The study found engineering to be the most popular major, followed by MBA, economics and law. (Odd, but journalism wasn't high on the list.)

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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