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Increasing Male Earnings Inequality in Canada and the United States, 1981­1997: The Role of Hours Changes versus Wage Changes

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  • Susan Johnson
  • Peter Kuhn

Abstract

This paper looks at changes in hourly wages and hours worked per week of prime-age males in different skill groups (measured by earnings quintile) in the United States and Canada from 1981 to 1997. The analysis reveals that increases in hourly wage inequality are primarily responsible for increases in weekly earnings inequality in both countries. Increases in the dispersion of hours worked per week play a more important part in explaining the increase in earnings inequality in Canada than in the United States. High-skill workers experienced increases in earnings growth due to increases in hours and, at least for the US, increases in wages. In contrast, low-skill workers experienced declines in earnings growth due to decreases in wages and hours. This evidence is consistent with a skill-biased demand shock. In Canada a larger percentage of the reduction in earnings of low-skill workers is accounted for by declining hours. This evidence suggests a higher degree of downward wage rigidity in Canada than in the United States.

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Bibliographic Info

Article provided by University of Toronto Press in its journal Canadian Public Policy.

Volume (Year): 30 (2004)
Issue (Month): 2 (June)
Pages: 155-176

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Handle: RePEc:cpp:issued:v:30:y:2004:i:2:p:155-176

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  1. Kevin M. Murphy & W. Craig Riddell & Paul M. Romer, 1998. "Wages, Skills, and Technology in the United States and Canada," NBER Working Papers 6638, National Bureau of Economic Research, Inc.
  2. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(3), pages 57-80, Summer.
  3. Morissette, Rene, 1995. "Why Has Inequality in Weekly Earnings Increased in Canada?," Analytical Studies Branch Research Paper Series 1995080e, Statistics Canada, Analytical Studies Branch.
  4. Murphy, Kevin M & Welch, Finis, 1993. "Inequality and Relative Wages," American Economic Review, American Economic Association, American Economic Association, vol. 83(2), pages 104-09, May.
  5. Wasmer, Etienne, 2001. "Between-Group Competition In The Labour Market And The Rising Returns To Skill: US And France 1964-2000," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2798, C.E.P.R. Discussion Papers.
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Cited by:
  1. Lozano, Fernando A., 2009. "Understanding the Workweek of Foreign Born Workers in the United States," IZA Discussion Papers 4317, Institute for the Study of Labor (IZA).
  2. Heisz, Andrew & Larochelle-Cote, Sebastien, 2007. "Comprendre les differences regionales dans les heures de travail," Direction des etudes analytiques : documents de recherche 2007293f, Statistics Canada, Direction des etudes analytiques.
  3. Heisz, Andrew & Larochelle-Cote, Sebastien, 2007. "Understanding Regional Differences in Work Hours," Analytical Studies Branch Research Paper Series 2007293e, Statistics Canada, Analytical Studies Branch.

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