Economic and Social Reports, April 2023

The April 2023 issue of Economic and Social Reports, which contains four articles, is now available.

Economic conditions evolve as borrowing costs rise

Economic activity slowed during the second half of 2022 as businesses and households adjusted to higher borrowing costs. The article "Recent developments in the Canadian economy: Spring 2023" provides an integrated summary of recent changes in output, consumer prices, employment and household finances, and highlights changes in the economic data during the second half of 2022 and the winter months that followed in 2023.

Canadians' incomes rise faster than gross domestic product during the COVID-19 pandemic

The study "Real production and real income growth over the COVID-19 pandemic" found that during the COVID-19 pandemic, Canadians' real incomes increased faster than real gross domestic product (GDP). Real GDP is usually a good indication of the material progress of a country, as it represents the quantity of goods and services produced nationally. In contrast, real national income is the quantity of goods and services that Canadians can purchase with their income from production. During the pandemic, Canadians' real incomes rose faster than real GDP mainly because the price of raw materials exports (e.g., oil, lumber and minerals) rose faster than the price of imports (e.g., televisions, machinery and vehicles). By the third quarter of 2023, real income had increased 3.4 percentage points more than real GDP had since the onset of the pandemic. While the growth in real income was more than double that of real GDP, it is uncertain whether this gap will last because it is largely based on whether commodity prices rise or fall.

Divorce reduces retirement living standards of women to a greater extent than men

The study "A cross-cohort comparison of the economic impact of divorce and widowhood on seniors" found that women who were more recently divorced or widowed at age 70 years were doing better financially over the next 10 years compared with their counterparts from earlier years. However, women fared worse compared with men, as women in their 70s generally had lower incomes than men in their 70s. Reductions in income following divorce or spousal death were more pronounced among people in the top half of the income distribution, with women experiencing greater financial losses than men. The study followed income trajectories of five cohorts (1984, 1987, 1990, 1993, and 1996) of Canadians aged 54 to 80 years. In all cohorts, divorce reduced retirement living standards more than spousal death.

Differences in earnings by postsecondary field of study not due to high (or low) achievers in high school selecting high (or low) paying programs

The study "High school academic performance and earnings by postsecondary field of study" looked at the potential role high school grades played in earnings differences by field of study among a sample of postsecondary graduates who had attended a British Columbia high school. It found that differences in high school grades, despite being quite large, could not explain patterns in earnings by field of study.

For example, results showed that, despite being among top academic performers in high school courses, bachelor's degree graduates of physical and life sciences and technologies programs had average earnings (for men) and below-average earnings (for women). In contrast, men and women graduates of business, management and public administration programs registered the highest earnings, but had average academic performance in high school. The study also ruled out various non-cognitive skills, such as self-esteem or social engagement, as factors behind the earnings differences by postsecondary field of study. Knowing the earnings potential of different fields of study is important for postsecondary students in career planning.

The Daily