June 2002, Vol. 125, No. 6
Nations and inequality
Multiple jobholding in Canada
Précis from past issues
Nations and inequality
One especially important international comparison is of trends in wage inequality. Daron Acemoglu, in National Bureau of Economic Research Working Paper 8832, Cross-Country Inequality Trends, suggests that in addition to relative supply explanations for the faster rise of inequality in the United States and United Kingdom than in the rest of Europe, there may have been a differential change in the relative demand for skills.
Wage inequality and the return to education have risen quite quickly in the United States and Great Britain. The traditional relative supply accounting for this concludes that the relative supply of skill rose faster in continental Europe and that the wage setting institutions of European workers resisted rises in wage inequality.
That wage compression is the starting point for Acemoglu. Wage compression forces firms to pay higher wages to unskilled workers than they would otherwise. This creates greater incentive to adopt technologies that increase the productivity of those workers, thus raising relative demand for their services. In contrast, technology adoption in the United States is often characterized as "skill-biased"—oriented toward increasing the productivity of the highly-paid, highly-skilled worker.
There is considerable churn in employment among and within establishments; this has been well documented. Aubhik Khan, a senior economist at the Federal Reserve Bank of Philadelphia writing in the Bank’s Business Review, examines some of that literature and touches on two possible explanations for some of the patterns he finds.
One measure of job churning Khan reports on is the excess of job creation and destruction over the rates necessary to produce the net change produced in the period. Such "excess job reallocation" varied both by size of establishment and the establishment’s age. In general, smaller plants had higher rates of both job creation and job loss than did larger plants and higher measures of reallocation of employment after backing out net growth. Similarly, younger plants had higher rates of job creation, destruction, and "excess reallocation" than did older plants.
There are two explanations for these patterns of employment volatility, according to Khan’s article. The first is a credit and collateral story: Larger plants have more collateral and thus more access to credit to smooth out demand fluctuations, at least in the short term. The other is a learning story: Managers in younger (and usually smaller) plants are more responsive to new data on the profitability of the plant. This may lead to sharp adjustments in the early years of the plants life. As more data are accumulated over time, the influence of new pieces of evidence is attenuated to some degree. Kahn believes the two stories may be complementary explanations of employment changes at the plant level.
Multiple jobholding in Canada
In 2001, according to annual average data from the Canadian Labour Force Survey, about 5 percent of workers in that country held more than one job during the survey’s reference weeks. (This estimate is quite similar to the annual average multiple jobholding rate produced for the United States by the Current Population Survey in 2001.) Katherine Marshall, writing in the Statistics Canada publication Perspectives on Labour and Income, reports that the share of Canadians that experienced at least one spell of multiple jobholding during the year was double that, about 10 percent.
Using longitudinal data from the Survey of Labour and Income Dynamics, Marshall also was able to estimate durations of completed spells of multiple jobholding and analyze the characteristics of short-, medium-, and long-term multiple jobholders in 1996. The average first spell of "moonlighting" was 8 months. Of the 1.1 million multiple jobholders who completed a spell that began in 1996, a little less than a third started a second before 1999. The median gap between such spells was 9 months.
The most striking demographic dimension among multiple jobholders in late-1990s Canada was the difference in age between those who moonlit for relatively short spells versus those who had longer spells of multiple jobholding. Short-term moonlighters tended to be younger—median age 27 years—while longtermers had a median age of 40 years. Marshall attributes this to differing motivations for holding more than one job: "Younger workers (under age 35) were most likely to state [in the 1995 Survey of Work Arrangements] either household expenses or debts as the main reason for holding more than one job, whereas older workers (45 and older) were more likely to answer that they enjoyed the work on the second job."
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