One of the most important determinants of the plaintiff’s future earnings is the rate at which those earnings will grow. There are two broad determinants of this rate. First, each individual benefits from increases that arise from gains in experience, promotions, and job changes. Second, as the economy grows, the earnings of all individuals rise […]
Read More...Category: Earnings, prediction of
The Impact of a Mid-Career Change on Earnings
by Derek Aldridge and Christopher J. Bruce Vocational psychologists often recommend that injured plaintiffs retrain for a new occupation. An important question that arises in this situation is whether plaintiffs will start that occupation at an “entry-level” income (say the income of a 25 year-old) or at the income of an individual of the plaintiff’s calendar […]
Read More...Are Data from the 2011 Census Reliable?
In this article, Dr. Bruce examines the reliability of the 2011 Census income data. In the past, completion of the long form census was mandatory. In 2011, however, completion of this form was voluntary and the response rate decreased. While this created statistical problems concerning the reliability of the data, Statistics Canada had anticipated these problems and took steps to mitigate them. In his article, Dr. Bruce discusses these problems, and the solutions implemented by Statistics Canada, concluding that the 2011 census remains a reliable, high quality data source. It will remain our primary source of earnings information until data from the 2016 census are released sometime in 2018.
With respect to the 2016 census, we would note that it will be mandatory. Further, Statistics Canada will be sending the long-form section to a greater number of households than in past censuses (one in four households instead of one in five households), and will use income data directly from the Canada Revenue Agency, providing data for 100 percent of households. It is anticipated that because of these changes, the income data from the 2016 census will be the most accurate of any census to date.
Read More...Mathematical Mistake: Averaging Multiple Statistical Sources Together to Form One “Overall” Average Income Figure
In this article Laura Weir discusses an error that can occur by averaging multiple sources of statistical data in an attempt to obtain an overall average that is superior in quality to the individual averages.
Read More...The Impact of Childhood Sexual Abuse on the Educational Attainment and Adult Earnings of Canadian Women
This article concerns sexual abuse cases and the difficult task of determining the impact that the harm has had on the plaintiff’s earning capacity. Christopher Bruce and his colleague from the University of Calgary, Daniel Gordon, found that, on average, sexual abuse is not associated with lower educational levels or lower adult incomes among victims.
Read More...Using the HALS/PALS data sets to estimate a loss of income
In the article Derek Aldridge discusses the potential usefulness of Statistics Canada’s HALS/PALS disability statistics when attempting to estimate a person’s loss of income. His opinion is that while one can use these data sets to predict a loss of income, in most cases these predictions are not helpful for our purposes.
Read More...Death and Retirement: Allowing for Uncertainty
In this article Christopher Bruce explains how experts deal with situations in which there is uncertainty about the plaintiff’s future income path – such as when it is not known whether the plaintiff will recover from his or her injuries. He also comments on an error that experts often make when dealing with such uncertainty.
Read More...Estimating the Impact of Mid-Career Retraining
In this article we investigate an issue we have not seen raised anywhere else in the literature on personal injury damages: When an individual is injured in their 30s or early 40s, and has to retrain for a new career, will that individual begin in that career at a salary equivalent to those of individuals with the same age as the plaintiff? Or will the plaintiff’s starting salary be more similar to those of younger individuals in the new career – perhaps 25-29 year-olds? The authors present information from a recent study that investigated this question; and comment on the use of this study for personal injury cases.
Read More...Using family background to Predict Educational Attainment in Canada
When a minor has suffered a serious injury, it is necessary to predict what the income level of the plaintiff would have been in the absence of that injury. In most cases, this is done by projecting an education level for the plaintiff and using census statistics to project the average income for that education level. This article examines some of the factors that can be used to predict a child’s eventual educational attainment.
Read More...Forecasting the Rate of Growth of Real Wages (Productivity)
Christopher Bruce summarises the most recent theoretical and empirical evidence concerning one of the most controversial, and poorly-understood, components of the calculation of future earnings – the so-called “productivity factor.” He notes that, although the observed rate of increase in earnings is tied to the rate of increase in labour productivity over the very long run, in shorter periods the two rates may differ if there is a significant increase or decrease in the supply of labour. Specifically, he reports that most economists now believe that the slow down in “real” wage growth (the rate of growth in excess of the rate of inflation) in the 1980s and 1990s occurred because of the increase in labour supply that came with the influx of “baby boomers.” That the baby boom is now working its way through the system implies, therefore, that the rate of growth of real wages will increase significantly in the next two decades.
Read More...Predicting post-secondary education attainment
In this article Mohamed Amery discusses cases involving plaintiffs who are minors, in which it is necessary to predict the level of education that these individuals would have obtained had they not been injured. Mr. Amery’s article provides information concerning indicators that can be used to make this prediction – including the education of the plaintiff’s parents; the level of the plaintiff’s employment while in high school; and whether the plaintiff ever failed a grade.
Read More...The impact of parental divorce or death on adolescents’ education & earnings
In this article Christopher Bruce and Mohamed Amery survey recent research concerning the impact that the death or divorce of a parent will have on the lifetime earning capacity of children.
Read More...The Connection between Labour Productivity and Wages
In this article Christopher Bruce examines the theory and evidence behind the assertion that wage growth among workers in a specific industry can be linked to the productivity growth of those workers. He finds that there are sound theoretical reasons for predicting that there will be very little correlation between an industry’s productivity growth and its wage growth. He also finds that the empirical evidence supports this prediction.
Read More...Combining Occupational Options
In this article, Christopher Bruce notes that it is often not clear at the time of trial what occupation the plaintiff would have entered had he or she not been injured, or what occupation he/she will now enter. In these cases, it is common for the vocational expert to offer a menu of possible occupations that are consistent with the plaintiff’s observed interests and aptitudes. In his article, Dr. Bruce looks at how one could combine these occupations (and the corresponding incomes) in order to determine an average, expected income for the plaintiff.
Read More...Rates of Return to Advanced Education in Alberta
This article, by Kelly Rathje, is based on the thesis she wrote for her M.A. in economics from the University of Calgary. Her thesis concerns the costs and benefits of post-secondary education. In particular, she views education as an “investment” in oneself. The costs of that investment are tuition, books, and foregone income. The benefits are measured in terms of increased income. On this basis, she can compare the relative “rates of return on investment” for various types and levels of education.
Read More...The MacCabe Judgment: Allowing the Use of Earnings Statistics for Males When Estimating the Future Income of a Female
In this article, Derek Aldridge explains how the MacCabe judgment is important from the economist’s view. What does the judgment imply about future cases involving injured or deceased females? There are many questions unanswered.
Read More...Using Industry Growth Rates to Update Census Occupational Earnings Figures
In this article Kris Aksomitis discusses the method used to adjust average income figures derived from the Census from past dollars to today’s dollars. He compares average incomes taken from the 1996 Census with adjusted figures from the 1991 Census to illustrate the accuracy of these adjustments.
Read More...The Effect of Alcoholism on Earning Capacity
In this article Nicole MacPherson investigates the effect of alcoholism on earning capacity. She has found that alcoholism has both direct and indirect effects on earnings. Ms. MacPherson brings to our attention both the obvious and overlooked effects of alcoholism.
Read More...Economic and Employment Prospects of the Disabled
In this article, Therese Brown reviews a study on the economic and employment prospects of the disabled. The panel data relied on for this study suggest that the impact of disability on income may not be as severe as has been suggested by most previous sources of information.
Read More...The Children of Immigrants – How Do They Fare?
In this article, Therese Brown notes various factors which may enhance or impede the socio-economic progress of the children of immigrants. Considerable evidence suggests that the positive effects associated with foreign parentage overwhelm all other factors. For that reason, the children of immigrants tend to exhibit higher potential earnings than do their counterparts with native-born parents.
Read More...Issues in Loss of Income Calculations for Self-Employed Individuals
In this article, Scott Beesley outlines various factors which complicate the assessment of the loss of income for self-employed individuals. After clearly laying out the potential pitfalls in these cases, he reviews a number of approaches which might be employed to maximise the accuracy of these estimates.
Read More...Predicting the Adult Earning Capacity of Minors
In this article Faizal Sharma sheds light upon the complex issue of predicting the potential income stream of a minor who has been injured. He explains that recent studies show a stronger correlation between parents’ income and that of their children than had previously been expected. The child’s level of education is positively correlated with the parent’s education and is negatively affected by being part of a non-traditional family.
Read More...The “Lost Years” Deduction
In this article Christopher Bruce deals with the current issue of appropriate compensation for the “lost years” of a plaintiff with reduced life expectancy. One of the approaches discussed includes the view that the plaintiff should be compensated for the lost earnings which remain after the cost of necessities is deducted. Further clarification is required on this issue to establish an estimated cost for “necessities.”
Read More...Do Sons Follow their Fathers?
In this article Christopher Bruce offers a brief comment on the link between a father’s earnings and his son’s.
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