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Recent Submissions

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    Optimal timing of hazardous waste clean-up under an environmental bond and a strict liability rule
    (University of Waterloo, 2018) Aghakazemjourabbaf, Sara; Insley, Margaret
    Inadequate site clean-up and restoration by resource extraction firms leave a toxic legacy which must be dealt with by governments. This study compares the impacts of an environmental bond and a strict liability rule on a firm's incentives for cleaning up hazardous waste during resource extraction and upon termination. The firm's problem is modelled as a stochastic optimal control problem that results in a system of Hamilton Jacobi Bellman equations. The model is applied to a typical copper mine in Canada. The resource price is modelled as a stochastic differential equation, which is calibrated to copper futures prices using a Kalman filtering approach. A numerical solution is implemented to determine the optimal abatement and extraction rates as well as the critical levels of copper prices that would motivate a firm to clean up the accumulated waste under each policy. The paper demonstrates that an environmental bond provides strong waste abatement incentives, implying that the waste is more likely to be cleaned up under the bond than the liability. The strict liability rule imposes sunk costs on a firm upon termination which would motivate it to remain inactive as a way to escape clean-up costs. However, the environmental bond raises funds ex ante for future clean-up costs and thus encourages site restoration.
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    Spousal labour supply adjustments
    (University of Waterloo, 2018-10) Lluis, Stephanie; McCall, Brian
    In this paper, we study the impact of increased generosity in the unemployment insurance system on labour supply adjustments of a spouse following the job loss of his/her partner. We exploit the longitudinal household format of the Canadian Labour Force Survey following labour force transitions of each spouse over time and estimate spousal labour supply responses arising from an added worker effect, whereby spousal labour supply increases following the partner's job loss. We study whether the additional weeks of benefits offered by the Extended Weeks (EW) pilot, an initiative of the Employment Insurance program implemented in a subset of regions, had a differential impact on spousal labour supply. We use a difference-in-difference (DiD) approach to identify (separately from the added worker effect) a crowding-out effect of EI on the spousal labour supply resulting from the greater generosity of the added benefits weeks. Our fixed-effect estimation results show a statistically significant and substantial added worker effect for married women. Our DiD results show evidence of EI crowing-out the labour supply of wives whose spouse's job loss qualifies for EI benefits. The crowding-out effect of EI diminishes about 55% of the added worker effect.
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    Marital property laws and women's labour supply
    (University of Waterloo, 2018) Lluis, Stephanie; Pan, Yazhuo (Annie)
    In this paper we study whether and if so how changes in the marital property law following the amendment of the Civil Code of Quebec to improve economic equality between spouses impacted household labour supply and individuals' marital decisions. We exploit detailed information on individual labour market and marital status from the Labour Force Survey to analyze short-term changes in labour supply and marital decisions before and after the reforms in Quebec relative to other provinces that did not experience the changes in the marital property law over that time period. Investigating the labour supply and marital decisions' responses to a policy changing the distribution of resources between men and women may assist welfare agencies in the design of family reforms and more generally, help further reduce women's entry into poverty. Furthermore, analyzing whether the Quebec marital property law changed the demographic mix of couples may further inform policymaker about possible ways to improve gender equality.
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    Using distance functions to derive optimal progressive earnings tax and commodity tax structures
    (University of Waterloo, 2018-12-11) Burbidge, John
    Much of the research program in optimal taxation rests on the Atkinson-Stiglitz theorem (1976) — in the presence of optimal nonlinear earnings taxation, if leisure is weakly separable from goods, there is no role for differential commodity taxation. The nonlinear earnings tax in the theorem is one where, conditional on reported earnings, the government can choose tax paid and the marginal tax rate (mtr). The relationship between the average tax rate (atr) and mtr is unrestricted. Most governments operate progressive nonlinear tax systems in which, for each person paying taxes, mtr is not less than atr. I build on Deaton’s work on distance functions and taxation to show that the AS theorem fails in the presence of optimal progressive earnings taxation. Conditional on mtr ≥ atr, the search for optimal earnings tax structures cannot be undertaken without simultaneously studying optimal commodity taxation whether or not leisure is weakly separable from goods. The formal theory in the paper assumes two types. I also discuss a finite-type example of an optimal progressive earnings, and commodity, tax structure and present numerical examples with four types.
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    A comparative analysis of the labour market performance of university-educated immigrants in Australia, Canada, and the United States: Does policy matter?
    (University of Waterloo, 2018-02) Clarke, Andrew; Ferrer, Ana; Skuterud, Mikal
    We examine data from Australia, Canada, and the U.S. to inform the potential for immigrant screening policies to influence the labour market performance of skilled immigrants. Our estimates point to improvements in employment rates and weekly earnings of male university-educated immigrants in all three countries concomitant with skilled immigration policy reforms. Nonetheless, the gains are modest in comparison to a substantial and persistent performance advantage of U.S. skilled immigrants. Given that there is increasingly little to distinguish the skilled immigration policies of these countries, we interpret the U.S. advantage as primarily reflecting the relative positive selectivity of U.S. immigrants.