Category Labour markets
Why do we care about the labour share of income?
And by 'we', I mean 'Canadians'. A lot has been said and written about the decline in the labour share of income, usually calculated as total employee compensation divided by nominal GDP. This decline is generally regarded as a negative development: the reduction in the share of income going to workers is interpreted as a […]
A very simple model of too much city
100 identical individuals choose to live in one of two identical locations. The only thing they care about is how many people live in the same location. Let W individuals choose to live in the West, so 100-W choose to live in the East. The Utility of living in the West is U(W), and the […]
The (In)efficiency of Perfect Price Discrimination
I have always thought, and taught, that Perfect Price Discrimination leads to an efficient allocation of resources. I now think that is wrong. It only seems to work if we use partial equilibrium reasoning, for a single monopolist that practices PPD, holding constant consumers' income and the monopolist's Marginal Cost curve. It doesn't work in […]
Soldiers of Fortune goes to Hollywood
There are six identical men, who must choose one of them to do an unpleasant job. They could hold an auction and pay one of them to volunteer to do the job. But if they have diminishing marginal utility of consumption, they will prefer instead to roll a die to decide which one of them […]
Migration, Wages, and Corner Solutions
I'm trying to get my head straight on something. Macro farmboy lost in Urban Economics again. Read at your own risk. If immigration always increases real wages (or well-being), do we end up in a "corner solution", where everyone bunches together in one location leaving other locations empty? If so, that's a reductio ad absurdam, […]
Upward-sloping Demand curves for Labour and Housing
I have a simple thought-experiment ("model") that helps me think about the relationship between: migration; planning restrictions; wages; and house prices (or rents). Assume all workers are identical, all houses are identical, and it's strictly one worker lives in one house. The government of a small city/state controls both immigration and the number of houses […]
Monopoly/monopsony power and hungriness for sales/purchases
This is actually about the minimum wage debate. And I'm more asking you a question than giving you my answer. Bear with me for a minute. You are a seller. You sell a good for money. You have some degree of monopoly power over the good you sell. You face a downward-sloping demand curve, you […]
A composition effect in earnings growth and education attainment levels in Canada
I came across this post by Mickey Kaus a while ago, on trends in US earnings broken down by education attainment levels. From about the mid-70s to the mid-90s, earnings growth diverged sharply: increasing strongly for those with high levels of education, and falling for people with lower levels of education. Earnings growth has been […]
Job tenures and the gig economy
A few weeks ago, Alex Usher drew my attention to this post by the Pew Research Center, on job tenure patterns of 18-35 year-olds in the United States. The takeaway point was that, contrary to an oft-repeated narrative about the "new gig economy", job tenure patterns among millennials resemble those of the generation previous. Of […]
The Mary Tyler Moore Effect
In 1970, every Justice on the Supreme Court of Canada was male. Prime Minister Pierre Elliott Trudeau had an all-male cabinet. Canada had never had a female premier – or even a female television newsreader. Little girls across the country were starting to feel the faint stirrings of ambition, often encouraged by mothers who wanted […]
Worthwhile Canadian Initiative 
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