Op-Eds

There can be many reasons for society to subsidize parents for the cost of child care. The financial hurdle for a parent considering the merits of working versus staying at home to care for young children can be extremely high — especially at lower levels of family income, where incremental work hours are taxed heavily.

Mothers, in particular, are hard-hit by absence from the workforce and face larger wage penalties the longer they are away from paid work.

For economists, the main motivation for subsidizing child care is to encourage parents to participate in the workforce, thus boosting the economy through higher household incomes. As an added bonus, the extra income generates increased tax revenues, substantially offsetting…

A key element in every quarter’s release of numbers for the national economy is business investment. When capital spending on non-residential structures, machinery and equipment (M&E) and intellectual property products is strong, GDP and jobs get a boost in the short run — and, more important, workers get the tools they need to produce more, compete abroad, and earn higher incomes. When capital spending is weak, the reverse is true: the economy takes a near-term hit…

The Bank of Canada announced on Wednesday that it was holding its overnight rate constant at 1.75 per cent. Although this was what the markets expected, it flies in the face of the general trend toward rate cuts by central banks around the world. It seems unlikely that the Bank of Canada can resist conforming to this trend for much longer, despite the overall strength of the Canadian economy.

Current conditions certainly seem to justify holding the line. Second-quarter economic growth was particularly strong, making up for weakness in the first quarter. It exceeded market expectations and the estimate of the Bank of Canada in its July Monetary Policy Report. Headline inflation in July was steady at 2 per cent. This was also…