Appendix D: Methodology

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The basic methodology consists of six steps:

1. taking totals from the Canadian System of National Accounts (CSNA) for jobs, hours worked, and wages and salaries
2. disaggregating these totals, using data from the CSNA for full-time and part-time jobs
3. distributing the CSNA totals for 2000,2005, and 2010 across occupations, sex and age groups, and immigrant status based on census and National Household Survey (NHS) data
4. building time series from these benchmarks based on movements in corresponding series from the Labour Force Survey (LFS)
5. smoothing the time series for LFS occupations, while keeping the overall industry group totals
6. making limited, final adjustments to data values.

The following describes the methodology and implicit assumptions in more detail.

Step 1: Benchmark totals

The industry group totals for jobs, hours worked, labour income and wages and salaries, including the details by class of worker (employee or self-employed), by full- and part-time status, are from the Canadian Productivity Accounts (CPA) database.

These data do not exactly meet requirements, however, and a number of adjustments are needed. In particular:

1. The labour component of mixed income from self-employment is imputed by multiplying the hours worked in self-employment by the average hourly wage per employee job. This method assumes that the self-employed and paid employees earn the same on average.^{Note 1} However, the imputation is imposed at the lowest level of the CPA database, resulting in differences in earnings between self-employed and paid employees in tourism industry aggregates.
2. The CSNA jobs data follow the CSNA version of North American Industry Classification System (NAICS), which is simply a special aggregation that defines the working level (W level) industries of the Input-Output Tables. At this level, detail is available only for two parts of accommodation services, traveller accommodation (NAICS 7211) and RV parks, recreational campgrounds and rooming and boarding houses (NAICS 7212 + NAICS 7213 = 721A at the W level). An adjustment is required to remove rooming and boarding houses. This is done using details from Survey of Employment Payroll and Hours (SEPH) on the industry's share of overall jobs, hours and earnings. These shares are used to adjust both employee and self-employment jobs. The same method is used to remove the non-tourism sub-industries of rail transportation (NAICS 4821), automotive equipment rental and leasing (NAICS 5321), food services and drinking places (NAICS 7220), performing arts, spectators and related industries (NAICS 7110) and amusement and recreation industries (NAICS 7131+ NAICS 7132 + NAICS 7139 = 713A at the W level).

Step 2: Distribution of CSNA data by full- and part-time status

Data from the CPA database in the CSNA are used to split jobs, hours worked and income by full-time and part-time status.

Step 3: Distribution of industry totals by occupation

Information on the occupational distribution of jobs comes from the Census. Step 3 involves using this source to distribute the CSNA totals by occupation, sex, age group and immigrant status.

This step relates only to employee jobs, as occupational details are not developed for the self-employed. The Census of Population and NHS are used to distribute the industry group totals established in the second step for the years 2000, 2005 and 2010 (i.e., the reference years for the 2001 and 2006 Censuses and 2011 NHS).

To develop occupational distributors for the industry group totals, special census tabulations are prepared, identifying persons in the tourism industries who had employment income in the reference year and were not self-employed. The selected persons are grouped according to their industry and whether they worked mainly full-or part-time during the reference year. For each of these groups the distribution of the (weighted) sample by occupation is determined, as well as the distribution of total hours worked and wage and salary income.

The occupational distributor for hours worked is based on the distribution of total hours (jobs multiplied by average hours worked) across occupations within each industry group.

The occupational distributor for wages and salaries is based on the distribution of total wages and salaries (jobs multiplied by hours worked multiplied by hourly earnings) across occupations in each industry group.

Step 4: Building the occupational time series

Step 4 entails using the corresponding LFS annual average series by occupation, age group and sex to build a time series. Information on immigrant status while available from the LFS was not considered robust enough at the detailed level, and therefore the percentage distribution from the census reference years (2000, 2005 and 2010) is used. To take into account the change in the immigrant ratio, a linear interpolation is used between the two censuses, and the ratio is fixed outside census years. The LFS data are adjusted to the census levels to maintain growth rates between the census years.

Step 5: Smoothing the LFS data

Step 5 entails smoothing (using a four-year moving average) to reduce volatility in the occupational time series found in the LFS. It is implemented in a way that preserves the overall industry group totals (from the CSNA) and the occupational distributions (from the 2001 and 2006 Census).

A simple moving average is applied to the indicators (discussed in Step 3) used to build the time series on jobs, hours worked and wages and salaries, full-and part-time, by occupation and for each industry. A four-year moving average was judged to provide the best results overall in terms of reasonableness and consistency, reduced volatility, and minimizing the need for manual adjustments.

Step 6: Other adjustments

The last step in developing the total industry estimates involves adjustments when the smoothed series appear out of line or generate erratic movements in the implied average annual hours or average hourly earnings. More specifically, adjustments are made if hourly earnings are more than four times higher than the corresponding occupation average or less than half of the Ontario minimum wage or if hours reported are more than 70 hours a week.^{Note 2} Results indicate that the smoothing and adjustments have little effect on the general pattern of the occupational distributions.

PTHRM-specific adjustments

For the Provincial-Territorial Human Resource Module, two additional steps must be performed. First, SEPH data in Step 1 are summed by region to defeat increased variability by province and territory. Second, data from the National Household Survey, Censuses of Population, and Labour Force Survey are benchmarked to the provincial-territorial distribution of jobs present in the CSNA data. This step is necessary to ensure numerical consistency of the disaggregated totals.

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Notes

1. In past updates this imputation included supplementary labour income (SLI). However, self-employed do not contribute to the majority of plans/programs included in SLI. Since 2009, SLI is excluded from labour income for self-employed.
2. For details on Ontario minimum wage and standard hours for hours of work, see Ontario Employment Standards Act, 2000 and regulations 285/01.