7. Appendix

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7.1 Data source

The T2-LEAP database was created by linking two administrative databases: the Longitudinal Employment Analysis Program (LEAP) and the Corporate Tax Statistical Universal File (T2SUF). LEAP includes all employers in Canada (incorporated and unincorporated) that register a payroll deduction account with the Canada Revenue Agency (CRA). The database was originally designed to provide longitudinal data on the behaviour of employment levels of Canadian businesses (Baldwin et al., 1992). The T2SUF database includes all incorporated firms that filed a T2 tax return with the CRA and provides data on sales, gross profits, equity, and assets.

The LEAP combines data from three major sources: the administrative T4 data from the Canada Revenue Agency (CRA), information from Statistics Canada's Central Frame Database or Business Register, and the Survey of Employment, Payrolls and Hours (SEPH). In linking the BN payroll account-province observations from the T4 administrative files to statistical enterprises in the Business Registry, the LEAP becomes a longitudinal file of enterprises with information on the payroll at the national and provincial levels. Information from the SEPH is used to calculate a measure of employment for each enterprise―an Average Labour Unit (ALU). An ALU is the average employment an enterprise would have if it paid its workers the average annual earnings (AAE) of a typical worker in the enterprise's 4-digit industry, province and enterprise size class, where AAE are derived using information from the SEPH.^{Note 1}

Because employment data in the LEAP file are reported on a calendar-year basis and the year of attribution on the T2 files is set at the end of a fiscal period, the values of financial variables in the T2 files are converted to calendar-year terms in T2-LEAP.

Linkage between the LEAP and T2 files does not result in a universe of incorporated enterprises; a percentage of records is not matched (Chart 8). Post-2000, approximately 37% of T2 records could not be matched to a LEAP record. However, despite the low match rate, the fraction of revenue accounted for by unmatched records averages only 6%.

Chart 8 Fraction of T2 records and revenue from T2 records that cannot be matched to Longitudinal Employment Analysis Program

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Note

1. More information on the derivation of ALU is available in Lafrance and Leung (2009).