Canadian Journal of Economics-Revue Canadienne D Economique最新文献

Labour mobility is an important mechanism to equilibrate regional differences in labour market conditions. Yet, little is known about underlying differences between individuals that explain why some stay in place during times of economic hardship while others in objectively similar situations choose to leave. Using a novel dataset comprising 59,974 respondents of a national community health survey from Canada linked to their administrative tax records, this paper provides new insights into this important issue. Specifically, I investigate the extent to which individuals' objective and subjective ties to their local communities mitigate or exacerbate the decision to relocate following an exogenous job separation. To credibly identify this effect, I exploit variation in regional employment conditions over time caused by construction industry shocks during the Great Recession, based on an instrumental variables approach. The results indicate that job loss increases the likelihood of migrating within the same province by approximately 1.4 to 2.3 percentage points among men. Moreover, this effect is driven primarily by individuals with low sense of community belonging, which indicates “push and pull” between the need to relocate for work and the desire to stay near family and friends.

Preferential trade agreements have boomed in recent years and extended their reach well beyond tariff reduction, to cover policy areas such as investment, services, competition and intellectual property rights. This paper uses new information on the content of preferential trade agreements to examine the trade effects of deep agreements and revisit the classic Vinerian question of trade creation and trade diversion. Our results indicate that deep agreements lead to more trade creation and less trade diversion than shallow agreements. Furthermore, some provisions of deep agreements have a public good aspect and increase trade also with non-members.

This paper reviews and extends the recent empirical literature on the impact of climate change on mortality and adaptation in the United States. The analysis produces several new facts. First, the reductions in the impact of extreme heat on mortality risk previously documented up to 2004 have continued up to 2019, consistent with continued investments in health-protecting adaptations to high temperatures. The second part of the paper examines the private and external costs of electricity generation and consumption related to high temperatures, a commonly used proxy for measuring the consumption of adaptation services. Extreme temperatures increase electricity demand in the residential sector (relative to moderate temperatures), but not in the commercial, industrial and transportation end-use sectors. The additional electricity demand in response to high temperatures results in significant external costs due to the release of local and global pollutants caused by the combustion of fossil fuels in order to produce electricity. These external costs, documented for the first time in this paper, are one order of magnitude larger than the private cost of adaptation associated with electricity consumption.

I use a quasi experiment, conducted in the field, to evaluate how the workers of an economic firm responded to threats to cut their piece rates. During the study, the piece rate paid to workers was initially set above the regular rate, given working conditions. In a commitment treatment this high rate was paid without any threat of revision. During a non-commitment trial, the high rate was accompanied by a threat from management to reduce the rate if, after two days of work, average earnings were too high. The empirical results display strong ratchet effects. Workers withheld output by 16% under non-commitment relative to commitment. The firm eventually reduced the piece rate from the initial high rate, but left it above the regular rate, giving workers the possibility to extract rents. Workers showed no tendency to restrict output during this phase of the study.

We report on a laboratory experiment designed to assess risk preferences in a decision environment where real losses can occur. Specifically, we utilize an asset integration protocol designed to ensure that cash provided to treatment group participants by the experimenter is fully integrated into each individual's wealth. This cash is placed at stake in an incentivized risk-preference elicitation task based on the well-known Holt and Laury (2002, 2005) methodology. Our experimental design allows us to distinguish between the predictions of expected utility and prospect theory. We find that features consistent with expected utility theory, constant relative risk aversion and rank dependent expected utility functions, are insufficient to explain our experimental results. However, preference functions based on prospect theory, accounting specifically for loss aversion, capture the observed behaviour of participants in the experiment.

When misrepresenting private information is costly and each type has a different “natural” least-cost signal or message, the availability of multiple signals has a significant effect on signalling equilibria and on the set of implementable outcomes in a screening context. In particular, welfare losses associated with costly signalling disappear as the number of available signals increases, yet at the same time each type is identified with a high degree of precision in every equilibrium satisfying a dominance criterion. In the screening context, we establish conditions under which the principal can implement an arbitrary allocation profile at a small communication cost. This result helps to explain why employers often prefer to screen applicants via multiple interviews rather than via menus of contracts. We also derive an optimal screening mechanism in such a setting. A surprising property of this mechanism is the absence of exclusion.

Finding a good parametric approximation to the productivity distribution is a problem of general interest. This paper argues that heterogeneity in productivity is best captured by finite mixture models (FMMs). FMMs build on the existence of unobserved subpopulations in the data. As such, they are generally consistent with models of firm dynamics differing between groups of firms and allow for a very flexible distribution fit. Relative to commonly used parametric alternatives, we find that FMMs are the only distributions able to provide a sufficiently good fit to the data. A gains from trade exercise with Portuguese data reveals that only FMMs approximate the “true” gains reasonably well.

International trade can increase product market competition and hence be pro-competitive. Is this feature captured in new trade models? I study this question in a setting with firm heterogeneity à la Melitz, under any productivity distribution and standard demands (e.g., demands from an additively separable utility, linear, translog, logit). My results indicate that better export opportunities are pro-competitive: they reduce the domestic firms' markups and induce the exit of the least productive domestic firms. But, surprisingly, tougher import competition is completely offset by a reduction in the mass of domestic incumbents, leaving the competitive environment unaffected. Thus, it does not impact the prices, quantities, or survival productivity cut-off of domestic firms. Consistent with previous studies, I also find that a reduction in import trade costs under two large countries and two-way trade always decreases competition. I show that this outcome can be rationalized as capturing worse export conditions exclusively.

This paper proposes and examines the economic efficiency of novel payment schemes for the provision of wetland ecosystem services. By definition, payments for ecosystem services typically involve voluntary transactions between the beneficiaries and providers of ecosystem services. We develop a theoretical model that addresses the role that a third party—such as a social planner or government agency, acting in the interest of society—can play to ensure the optimal provision of ecosystem services. We consider different regulatory frameworks combining payments for ecosystem services with a subsidy that the third party grants to the beneficiaries or providers of ecosystem services. We compare the outcomes of the different policy mixes characterized by different levels of involvement of the third party. Of particular interest is the comparison between the outcomes of payments for ecosystem services subsidy arrangements in which the third party plays decentralized and centralized roles. Our results show, among other things, that the third party is indifferent between a negotiated payment for ecosystem services combined with a subsidy scheme and the constrained first-best payments for ecosystem services subsidy scheme, in the presence of transaction and administrative costs. However, beneficiaries and providers may have conflicting preferences over the two payments for ecosystem services schemes.

We examine the effect of the US shale gas boom on the international trade and consumption of coal and emissions. We estimate a structural model that links the domestic to the international coal market and use it to simulate counterfactual scenarios. Our results show that the total quantity of coal traded around the world in the absence of the boom is essentially the same as the actual. Moreover, the change in total coal consumed worldwide is also small. Although a compositional change towards coal with different heat content could have significant environmental effects, we show that this is not the case either. Hence, US coal exports simply displaced other coal exports without affecting the total CO$��{\hspace{0.17em}}_{�2�}�$ and SO$��{\hspace{0.17em}}_{�2�}�$emissions. Despite the small overall effects, several countries experience a substantial decrease in their imports of US coal and the associated emissions in the absence of the boom.