Waterloo economics series | 2014

#14-001 -- Alicia Adsera and Ana Ferrer

Immigrants and demography: Marriage, divorce, and fertility

#14-002 -- Ana Ferrer and Alicia Menendez

The returns to flexible postsecondary education: The effect of delaying school

Abstract

We compare the returns to education between graduates of post secondary institutions who delayed their tertiary education for some time and those that proceeded with no delays. Using a unique survey that collects information on a representative cohort of graduates, we are able to estimate the effects of delaying school among successful graduates abstracting from specific macroeconomic conditions at the time of graduation. Our results show that graduates that delayed their education enjoy a premium relative to graduates that did not, even after considering other factors such as experience or labor market connections. These estimates are robust to the possibility of selection in the decision to delay school.

JEL classification

J24, I2

Keywords

Human capital; postsecondary education; flexible school choice; school delay

#14-003 -- Francisco M. Gonzalez, Itziar Lazkano and Sjak A. Smulders

Second-best national saving and growth with intergenerational disagreement

Abstract

We illustrate the contrast between two sources of intergenerational disagreement when generations are overlapping and governments aggregate preferences in a utilitarian manner. Social preferences tend to exhibit a present-bias because generations are imperfectly altruistic about future generations; but they tend to exhibit a future-bias because coexisting generations are imperfectly altruistic about currently older generations. When the future-bias dominates, society faces an intergenerational equity problem, in which case the present-day government tends to support institutions that enable commitments to lower growth at the expense of future generations. This is so even with perfect altruism about future generations.

JEL classification

D60, H30, O40

Keywords

intergenerational disagreement; altruism; overlapping generations; growth;
quasi-hyperbolic discounting; commitment.

#14-004 -- Andrew Clarke and Mikal Skuterud

Immigrant Skill Selection and Utilization:  A Comparative Analysis of Australia, Canada, and the United States

Abstract

We compare literacy skills and relative wage and employment outcomes of Australian, Canadian, and U.S. immigrants.  We find substantially higher immigrant skill levels at the lower end of the distribution in Australia, especially among recent arrivals, but little difference at the top.  In addition, we identify larger wage returns to immigrant skill in the U.S. whch we argue reflects language-skill complementarities.  Our results suggest that the benefit of a point system lies in its potential to limit unskilled immigration, rather than in raising skills at the upper end of the distribution where the growth potential of immigration is likely greatest.  

JEL classification

J61, J31, J23

Keywords

Immigrant workers; labour market integration; immigrant selection policy. 

#14-005 -- Scott Legree, Tammy Schirle, and Mikal Skuterud

The Effect of Labour Relations Laws on Union Density Rates:  Evidence from Canadian Provinces

Abstract

We provide evidence on the potential for reforms in labour law to reverse deunionization trends by relating an index of the favorability to unions of Canadian provincial labour relations statutes to changes in provincial union density rates between 1981 and 2012. The results suggest that shifting every province’s 2012 legal regime to the most union-friendly possible could raise the national union density by up to 7 percentage points in the long run. This effect appears driven by regulations related to the certification of new bargaining units, the negotiation of first contracts and the recruitment of replacement workers. The effects of reform are largest for women, particularly university-educated women employed as professionals in public services. Overall, the results suggest a limited potential for labour relations reforms to address growing concerns about labour market inequality.

#14-006 -- Hassan Benchekroun and Alain-Désiré Nimubona

Environmental R&D in the Presence of an Eco-Industry

Abstract

We compare the performance of R&D cooperation and R&D competition within the eco-industry using a model of vertical relationship between a polluting industry and the eco-industry. The polluting industry is assumed perfectly competitive and the eco-industry is a duopoly in the market for abatement goods and services, with one firm acting as a Stackelberg leader and the other firm as a follower.  When there are full information sharing under R&D cooperation and involuntary information leakages under R&D competition, we find that the only case where government intervention is needed is the case where R&D cooperation yields a higher welfare but smaller profits for the follower eco-industrial 
firm than R&D competition. Furthermore, because of the market power that the eco-industry enjoys, we show that more total R&D efforts under R&D competition do not necessarily translate into more abatement activities and larger social welfare. When there are no involuntary leakages of information under R&D competition, this result occurs because R&D competition can induce more total R&D efforts than R&D cooperation even for significantly high R&D spillovers if the marginal environmental damage is large.

JEL Classification

L13, O32, Q55, Q58

Keywords

Eco-industry, environmental R&D, R&D cooperation, environmental R&D outsourcing, upstream innovation.

#14-007 -- Andrew Leach and Alain-Désiré Nimubona

Abatement Technology Search

Abstract

We develop a three-stage model of abatement technology search, adoption, and deployment. Using this model, which draws on search theory tools more frequently used in labour and monetary economics, we compare market-based and command-and-control pollution control instruments with respect to the incentives each provides for abatement technology search and adoption, expected emissions reductions, and expected compliance costs. We show that the polluting firm always has more incentives to search for and adopt a more efficient abatement technology under either an emissions tax or a tradeable permit system than under an equivalently stringent emissions standard. We also show that while expected incentives for innovation are comparable under emissions taxes and tradeable permit regimes, the likelihood for total future compliance costs to be reduced after an increase in the stringency of environmental policy - the so-called Porter hypothesis - is higher with a tradeable permit regime.

JEL Classification

Q55, Q58, H23, D83

Keywords

Abatement Technology; search; prices versus quantities; oil sands; Porter hypothesis.

#14-008 -- Hongxiu Li and Horatiu A. Rus

Adaptation to Climate Change and International Mitigation Agreements with Heterogeneous Countries

Abstract

This paper investigates the impact of adaptation on a country's incentive to participate in emission-reducing International Environmental Agreements (IEAs) on climate change.  We develop a framework where heterogeneity across countries is introduced with respect to the benefits and costs of both mitigation of emissions and adaptation to reduce the impact of climate change.  The paper uses two coalition stability concepts and numerical simulations to look at stable coalitions.  We also study the effect of an within-coalition increase in the efficiency of adaptation on emissions and on countries' incentives to cooperate.  Our main findings are: first, investment in adaptation technology has a public good feature inside the coalition, compared to being strictly a private good in the non-cooperation case.  Second, a large coalition cannot be achieved if countries differ much in terms of vulnerability.  Third, cooperation incentives can be enhanced by a coalition which diffuses technological progress on climate change adaptation among its members.

JEL Classification

H41, Q54, Q59

Keywords

Climate Change, Mitigation, Adaptation, International Environmental Agreements, Heterogeneous Agents, Coalition Stability