Analysis

Using survey data, this paper investigates problems that firms in the Canadian manufacturing sector face in their decision to adopt advanced technology. The data show that while the use of advanced technology is relatively important (users account for over 80% of all shipments), it is not widespread among firms (users represent only about one-third of all establishments). One explanation lies in the fact that while advanced technologies provide a wide range of benefits, firms also face a series of problems that impede them from adopting advanced technology. These impediments fall into five groups: cost-related, institution-related, labour-related, organization-related, and information-related.

While it might be expected that impediments would be higher for non-users than users of technologies, the opposite occurs. We posit that the reason for this is that innovation involves a learning process. Innovators and technology users face problems that they have to solve and the more innovative firms have greater problems. We test this by examining the factors that are related to whether a firm reports that it faced impediments. Our multivariate analysis reveals that impediments are reported more frequently among technology users than non-users; and more frequently among innovating firms than non-innovating ones. We conclude that the information on impediments in technology and other related surveys (innovation) should not be interpreted as impenetrable barriers that prevent technology adoption. Rather, these surveys indicate areas where successful firms face and solve problems.

This paper extends earlier work by updating the structure and policy parameters of payroll taxes in Canada. Drawing from a newly available dataset, it also reports trends on the level, growth and role of each component of these taxes in recent years. Finally, it compares Canadian payroll taxes to those of the world's leading developed countries. The following highlights the main findings.

Payroll taxes in Canada have grown considerably since the early 1980s, constituting an increasingly important source of revenues for both the federal and provincial governments. However, the rapid expansion observed in earlier years has in large part slowed down in the early 1990s. Payroll tax revenues collected from employees and employers in the country have stabilized at around 5.7% of GDP or 14.0% of total federal and provincial government revenues since 1992; the effective total payroll tax rate has levelled off at around $12.20 for every $100 of wages and salaries since 1994.

The structure, level, growth, and role of each component of payroll taxes vary considerably from one province to another. Yet, EI premiums have remarkably been the largest component of these taxes in every province in both the 1980s and the 1990s, regardless of whether there are provincial payroll taxes; rising EI premiums have also consistently been the leading contributor to the expansion of total payroll taxes during this period.

Despite rapid growth in the 1980s and early 1990s, Canadian payroll taxes remain one of the lowest in the world's major developed economies. According to data compiled by the OECD, total payroll tax revenues in Canada amounted to 6.0% of GDP in 1996 --- that is 14% lower than that of the United States (at 7.0% of GDP); the lowest in the G7 nations; and the 9th lowest among the 29 OECD member states.

This article provides an overview of changes between 1980 and 1997 in various taxes in the G-7 and OECD countries.

This paper starts from the definition that "structural unemployment occurs when workers are unable to fill available jobs because they lack the skills, do not live where jobs are available, or are unwilling to work at the wage rate offered in the market." This implies that the number of vacancies in the Canadian labour market is an upper bound to the extent of "structural unemployment". The paper summarizes available estimates of the vacancy rate in Canada. In the high technology sector, vacancies may be equivalent to 2.2% of the labour force but evidence from more representative surveys indicates a range of 0.43% to 0.75% for the economy as a whole. Although during the 1980s the outward shift in the relationship between the Help-Wanted Index and the unemployment rate raised concerns that structural unemployment was an increasing problem in Canada, that shift has been reversed in the 1990s.

Some taxes may be higher, some lower than in other developed nations, but overall Canada's effective tax rate is middle-of-the-road. Using OECD data, this study compares several tax-t0-GDP ratios of the G-7 and the 29 OECD countires.

Payroll taxes vary widely in level and growth across the provinces. Of the nine taxes, only three are nationwide. This article looks at trends across the country. It also briefly compares total Canadian payroll taxes with those of other G-7 and OECD nations.

Payroll taxes have grown substantially since the early 1980s, and have become an increasingly important source of government revenues. This article, part one of a two-part analysis, details the various payroll taxes collected by the federal and provincial governments. A subsequent article will report on national and provincial trends in the level, growth and role of each component and compare Canadian payroll taxes to those of the other G-7 countries.

This paper highlights recent developments in self-employment in Canada and explores its relationship to unemployment/full-time paid-employment. There are now two and a half million Canadians working at their own businesses, amounting to 16.2% of the total labour force or accounting for 17.8% of total employment. In the first eight years of the 1990s, self-employment on average expanded by 4.1% per year, contributing to over three out of four new jobs the economy has created. Entry and exit data demonstrate that there are substantial flows into and out of this sector of the economy. Gross flows into and out of self-employment as the main labour market activity averaged nearly half a million per year between 1982 and 1994, amounting to 42% of the total self-employed population.

The fixed-effects modelling results show a statistically significant but empirically small negative (positive) relationship between self-employment and unemployment (full-time paid- employment). This conclusion holds true across different data sources, for different time periods, for different measures and definitions, for different empirical samples, and across various estimating techniques. There is also a statistically significant but empirically small negative (positive) relationship between exits out of self-employment and unemployment (full-time paid- employment). It appears that a host of non-cyclical factors are behind the recent surge in self-employment.

This paper i) documents the extent and cyclicality of self-employment entry and exit flows; ii) explores transitions to and from self-employment; and iii) investigates the influence of individual characteristics and labour market experience as well as macroeconomic conditions on the probability of moving into or out of self-employment.

The self-employed sector now employs over two and a half million Canadian workers, has expanded on average by over 4% a year so far in this decade and accounted for over three out of every four new jobs the economy has created. There are substantial flows both into and out of self-employment over the last 15 years. Gross flows into and out of self-employment averaged nearly half a million per year between 1982 and 1994, amounting to 42% of the total self-employed population.

Regression results reveal no statistical evidence supporting the dominance of the push hypothesis over the pull hypothesis --- the notion that people are increasingly pushed into self-employment by deteriorating economic conditions. This analysis is done both through time-series analysis and the analysis of the determinants of flows into (and out of) self-employment. As in paid employment, younger Canadians are subject to higher turnover in self-employment --- they are not only more likely to enter but also substantially more likely to leave self-employment. Prior paid-employment experience and prior self-employment experience are both found to be associated with a higher likelihood of entering self-employment. The longer one is self-employed, the less likely he/she is going to leave the business. Having a spouse in business (being self-employed) substantially increases the likelihood of the other spouse becoming self-employed --- a self-employed spouse often attracts the other to either join the family business or start their own. We also find evidence that steady family income through paid-employment from one spouse increases the self-employed's (the other spouse's) affordability to continue with the business venture and hence reduces the likelihood of leaving self-employment.

This paper investigates the inter-provincial labour mobility behaviour of immigrants relative to that of native-born Canadians. Foreign-born Canadians differ a great deal from their domestically-born counterparts. The foreign-born population is geographically concentrated in a few provinces and a few big cities. As a whole, they are older, better educated, more likely to be married, and more likely to have dependent children and bigger households. They are less active in participating in full-time education and training. They fare relatively better in the labour market. As a result, a higher proportion of them receive social security benefits that are directly tied to the presence of dependent children or age such as family allowance benefits and pension income, but a lower proportion receive benefits that are related to labour market performance such as employment insurance benefits and social assistance benefits.

As a whole, immigrants are relatively less mobile inter-provincially. This is true both nationally and across almost every province. Among those who move to other provinces, destinations for foreign-born migrants are highly geographically concentrated. Most of them make their new homes in Alberta, Ontario and British Columbia. A significantly lower proportion of them relocate to other provinces for economic considerations but a much higher proportion move to go to school or after retirement. Earnings return to their inter-provincial migration is significantly more substantial. This is the result of both wage increase and more hours of work after migration.

Multi-variate regression results show that there are no statistically significant structural differences in the determinants of inter-provincial migration decisions between comparable foreign- and native-born Canadians. The probability of moving to other provinces, for immigrants as well as for domestically-born Canadians, is higher if earnings potentials elsewhere are relatively higher, lower if it is relatively harder to find employment elsewhere, higher among better educated workers, lower among French-speaking Canadians, lower among union members, and decreases with age, family size and job tenure. None of the proxies for government's labour market interventions significantly affect the decision to move inter-provincially. The lower mobility rates among the foreign-born are fully attributable to distributional and compositional differences between the immigrant and non-immigrant populations.

These findings have a direct policy implication on immigration selection. To encourage population and labour force growth in economically less prosperous provinces, it appears appropriate and effective to amend the current immigration selection and approval system, considering intended destinations as an additional factor and awarding additional points to applicants who choose designated provinces.

Using survey data, this paper investigates problems that firms in the Canadian manufacturing sector face in their decision to adopt advanced technology. The data show that while the use of advanced technology is relatively important (users account for over 80% of all shipments), it is not widespread among firms (users represent only about one-third of all establishments). One explanation lies in the fact that while advanced technologies provide a wide range of benefits, firms also face a series of problems that impede them from adopting advanced technology. These impediments fall into five groups: cost-related, institution-related, labour-related, organization-related, and information-related.

While it might be expected that impediments would be higher for non-users than users of technologies, the opposite occurs. We posit that the reason for this is that innovation involves a learning process. Innovators and technology users face problems that they have to solve and the more innovative firms have greater problems. We test this by examining the factors that are related to whether a firm reports that it faced impediments. Our multivariate analysis reveals that impediments are reported more frequently among technology users than non-users; and more frequently among innovating firms than non-innovating ones. We conclude that the information on impediments in technology and other related surveys (innovation) should not be interpreted as impenetrable barriers that prevent technology adoption. Rather, these surveys indicate areas where successful firms face and solve problems.

This paper extends earlier work by updating the structure and policy parameters of payroll taxes in Canada. Drawing from a newly available dataset, it also reports trends on the level, growth and role of each component of these taxes in recent years. Finally, it compares Canadian payroll taxes to those of the world's leading developed countries. The following highlights the main findings.

Payroll taxes in Canada have grown considerably since the early 1980s, constituting an increasingly important source of revenues for both the federal and provincial governments. However, the rapid expansion observed in earlier years has in large part slowed down in the early 1990s. Payroll tax revenues collected from employees and employers in the country have stabilized at around 5.7% of GDP or 14.0% of total federal and provincial government revenues since 1992; the effective total payroll tax rate has levelled off at around $12.20 for every $100 of wages and salaries since 1994.

The structure, level, growth, and role of each component of payroll taxes vary considerably from one province to another. Yet, EI premiums have remarkably been the largest component of these taxes in every province in both the 1980s and the 1990s, regardless of whether there are provincial payroll taxes; rising EI premiums have also consistently been the leading contributor to the expansion of total payroll taxes during this period.

Despite rapid growth in the 1980s and early 1990s, Canadian payroll taxes remain one of the lowest in the world's major developed economies. According to data compiled by the OECD, total payroll tax revenues in Canada amounted to 6.0% of GDP in 1996 --- that is 14% lower than that of the United States (at 7.0% of GDP); the lowest in the G7 nations; and the 9th lowest among the 29 OECD member states.

This article provides an overview of changes between 1980 and 1997 in various taxes in the G-7 and OECD countries.

This paper starts from the definition that "structural unemployment occurs when workers are unable to fill available jobs because they lack the skills, do not live where jobs are available, or are unwilling to work at the wage rate offered in the market." This implies that the number of vacancies in the Canadian labour market is an upper bound to the extent of "structural unemployment". The paper summarizes available estimates of the vacancy rate in Canada. In the high technology sector, vacancies may be equivalent to 2.2% of the labour force but evidence from more representative surveys indicates a range of 0.43% to 0.75% for the economy as a whole. Although during the 1980s the outward shift in the relationship between the Help-Wanted Index and the unemployment rate raised concerns that structural unemployment was an increasing problem in Canada, that shift has been reversed in the 1990s.

Some taxes may be higher, some lower than in other developed nations, but overall Canada's effective tax rate is middle-of-the-road. Using OECD data, this study compares several tax-t0-GDP ratios of the G-7 and the 29 OECD countires.

Payroll taxes vary widely in level and growth across the provinces. Of the nine taxes, only three are nationwide. This article looks at trends across the country. It also briefly compares total Canadian payroll taxes with those of other G-7 and OECD nations.

Payroll taxes have grown substantially since the early 1980s, and have become an increasingly important source of government revenues. This article, part one of a two-part analysis, details the various payroll taxes collected by the federal and provincial governments. A subsequent article will report on national and provincial trends in the level, growth and role of each component and compare Canadian payroll taxes to those of the other G-7 countries.

This paper highlights recent developments in self-employment in Canada and explores its relationship to unemployment/full-time paid-employment. There are now two and a half million Canadians working at their own businesses, amounting to 16.2% of the total labour force or accounting for 17.8% of total employment. In the first eight years of the 1990s, self-employment on average expanded by 4.1% per year, contributing to over three out of four new jobs the economy has created. Entry and exit data demonstrate that there are substantial flows into and out of this sector of the economy. Gross flows into and out of self-employment as the main labour market activity averaged nearly half a million per year between 1982 and 1994, amounting to 42% of the total self-employed population.

The fixed-effects modelling results show a statistically significant but empirically small negative (positive) relationship between self-employment and unemployment (full-time paid- employment). This conclusion holds true across different data sources, for different time periods, for different measures and definitions, for different empirical samples, and across various estimating techniques. There is also a statistically significant but empirically small negative (positive) relationship between exits out of self-employment and unemployment (full-time paid- employment). It appears that a host of non-cyclical factors are behind the recent surge in self-employment.

This paper i) documents the extent and cyclicality of self-employment entry and exit flows; ii) explores transitions to and from self-employment; and iii) investigates the influence of individual characteristics and labour market experience as well as macroeconomic conditions on the probability of moving into or out of self-employment.

The self-employed sector now employs over two and a half million Canadian workers, has expanded on average by over 4% a year so far in this decade and accounted for over three out of every four new jobs the economy has created. There are substantial flows both into and out of self-employment over the last 15 years. Gross flows into and out of self-employment averaged nearly half a million per year between 1982 and 1994, amounting to 42% of the total self-employed population.

Regression results reveal no statistical evidence supporting the dominance of the push hypothesis over the pull hypothesis --- the notion that people are increasingly pushed into self-employment by deteriorating economic conditions. This analysis is done both through time-series analysis and the analysis of the determinants of flows into (and out of) self-employment. As in paid employment, younger Canadians are subject to higher turnover in self-employment --- they are not only more likely to enter but also substantially more likely to leave self-employment. Prior paid-employment experience and prior self-employment experience are both found to be associated with a higher likelihood of entering self-employment. The longer one is self-employed, the less likely he/she is going to leave the business. Having a spouse in business (being self-employed) substantially increases the likelihood of the other spouse becoming self-employed --- a self-employed spouse often attracts the other to either join the family business or start their own. We also find evidence that steady family income through paid-employment from one spouse increases the self-employed's (the other spouse's) affordability to continue with the business venture and hence reduces the likelihood of leaving self-employment.

This paper investigates the inter-provincial labour mobility behaviour of immigrants relative to that of native-born Canadians. Foreign-born Canadians differ a great deal from their domestically-born counterparts. The foreign-born population is geographically concentrated in a few provinces and a few big cities. As a whole, they are older, better educated, more likely to be married, and more likely to have dependent children and bigger households. They are less active in participating in full-time education and training. They fare relatively better in the labour market. As a result, a higher proportion of them receive social security benefits that are directly tied to the presence of dependent children or age such as family allowance benefits and pension income, but a lower proportion receive benefits that are related to labour market performance such as employment insurance benefits and social assistance benefits.

As a whole, immigrants are relatively less mobile inter-provincially. This is true both nationally and across almost every province. Among those who move to other provinces, destinations for foreign-born migrants are highly geographically concentrated. Most of them make their new homes in Alberta, Ontario and British Columbia. A significantly lower proportion of them relocate to other provinces for economic considerations but a much higher proportion move to go to school or after retirement. Earnings return to their inter-provincial migration is significantly more substantial. This is the result of both wage increase and more hours of work after migration.

Multi-variate regression results show that there are no statistically significant structural differences in the determinants of inter-provincial migration decisions between comparable foreign- and native-born Canadians. The probability of moving to other provinces, for immigrants as well as for domestically-born Canadians, is higher if earnings potentials elsewhere are relatively higher, lower if it is relatively harder to find employment elsewhere, higher among better educated workers, lower among French-speaking Canadians, lower among union members, and decreases with age, family size and job tenure. None of the proxies for government's labour market interventions significantly affect the decision to move inter-provincially. The lower mobility rates among the foreign-born are fully attributable to distributional and compositional differences between the immigrant and non-immigrant populations.

These findings have a direct policy implication on immigration selection. To encourage population and labour force growth in economically less prosperous provinces, it appears appropriate and effective to amend the current immigration selection and approval system, considering intended destinations as an additional factor and awarding additional points to applicants who choose designated provinces.