Comments on Foley and Green: Human

Capital and Inequality in Canada

Chris Robinson
University of Western Ontario
February 24, 2014
Chris Robinson University of Western Ontario Foley and Green
Wage Patterns: What are they? How can we interpret
them?
Paper gives careful and detailed description of available
evidence
Despite serious data problems, interesting patterns are
documented and a tentative picture emerges
Focus is on education, but major differences in male and
female patterns are also documented
Important feature special to Canada may be the effects of
a resource boom, but how will this play out in the future?
Neither canonical simple skill model, nor computer driven
task model t well for Canada
Chris Robinson University of Western Ontario Foley and Green
Human Capital and Inequality
Paper discusses role of human capital in inequality mainly
through decomposition approach to within and between
education group inequality in wages
Within group inequality is very large and very important for
explaining changes over time
Chris Robinson University of Western Ontario Foley and Green
Implications for Human Capital Policy and Inequality
Implications for potential impact of human capital policy,
based on papers interpretation of the evidence discussed
with respect to two areas
Early childhood targeted programs: paper provides an
interesting discussion related to heterogeneity and skill
types - a complicated issue to predict effects on inequality
University: based on the interpretation of the evidence,
paper suggests that simple expansion of the number of BAs
cannot be counted on as a policy to reduce inequality and
emphasizes caution
Chris Robinson University of Western Ontario Foley and Green
Comments I: A Simple Human Capital Prices and
Quantities Lens
Wages for different individuals may vary because of:
Variation in amounts/types of human capital they have to
rent or sell
Variation in the rental rates or prices they receive for
what they have to rent or sell
Question: Is source of inequality (changes) mainly due to:
Inequality (changes) in per capita quantities/types of human
capital supplied
Variation in rental rates or prices paid to rent human capital
Role of Human Capital Policy depends on answer
Chris Robinson University of Western Ontario Foley and Green
Comments II: Decomposition into Prices and
Quantities
Useful addition for policy: a decomposition of the wage
patterns into quantities/types and prices - not easy
Within group inequality (changes) may be largely quantity
inequality (changes): makeup of groups changes over time
Paper reference to downward wage rigidities for older
lower skill workers: possible price rigidity in Canada for this
group (Bowlus and Robinson)
Evidence of downward pressure on the high skill price from
an immigration shock over the 1980-2000 period (BR)
consistent with Aydemir and Borjas
Male-female wage (change) differences? A large part
quantity due to longer planned labour market period?
Chris Robinson University of Western Ontario Foley and Green
Comments III: Policy Areas Discussed in Foley and
Green
Child targeted: special interventions discussed in paper vs.
broader nancing and school production function policies:
Policy shifts to province wide nancing (Ontario)
equalizing?
Are policy choices for school production functions creating
differences between males and females? Between cohorts
(Green and Riddell)? Can they affect inequality by aiming
for more equal outcomes?
University: Are new marginal students different
quantity/type? (BR) Are they really more similar to, say,
college students? Cascade or appropriate allocation?
University vs college: Canadas greater emphasis on
college (vs. US) more equalizing? Why do we have this
policy? What do we know about its effects on inequality?
Chris Robinson University of Western Ontario Foley and Green
Comments IV: Expanded View of Human Capital
Policy Areas
Immigration/human capital policy link - to bring in more
human capital (quantity), but can also affect inequality via
skill price effects - magnitudes unclear
Evidence from US: mobile immigrants protect less mobile
native born from local labour market shocks
Training or retraining issues:
Increased turnover/mobility investigated as source of
increased inequality for US - specic capital issues.
Evidence for Canada?
Evidence (Stephen Jones) that emphasis shift in policy for
displaced workers from re-training to job search assistance
for existing (even if declining demand) skill may be
benecial - transferability between different but close
occupations
Chris Robinson University of Western Ontario Foley and Green