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Diverging male wage inequality in the United States and Canada, 1981-1988: Do institutions explain the difference?

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  • John DiNardo
  • Thomas Lemieux

Abstract

The U.S. and Canadian economies have much in common, including similar collective bargaining structures. During the period 1981-88, however, although both countries witnessed a decline in the percentage of workers belonging to unions and an increase in hourly wage inequality, those changes were much more pronounced in the United States than in Canada. Using data on men in Canada and the United States in 1981 and 1988 (from the Labour Force Survey and supplements to the Current Population Survey), the authors study the effect of labor market institutions on changes in wage inequality by computing simple counterfactuals such as the distribution of wages that would prevail if all workers were paid according to the observed nonunion wage schedule. Their results suggest that much more severe declines in the unionization rate in the United States than in Canada account for two-thirds of the differential growth in wage inequality between the two countries. (Abstract courtesy JSTOR.)

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Bibliographic Info

Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 50 (1997)
Issue (Month): 4 (July)
Pages: 629-651

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Handle: RePEc:ilr:articl:v:50:y:1997:i:4:p:629-651

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Cited by:
  1. Brian Nolan & Bertrand Maitre, 2000. "A Comparative Perspective on Trends in Income Inequality in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 31(4), pages 329-350.
  2. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, Elsevier.
  3. Thomas C. Buchmueller & John DiNardo & Robert G. Valletta, 2000. "Union effects on health insurance provision and coverage in the United States," Working Paper Series 2000-04, Federal Reserve Bank of San Francisco.
  4. Brian Nolan & Bertrand Maitre & Sarah Voitchovsky, 2010. "Earnings Inequality, Institutions and the Macroeconomy – What Can We Learn from Ireland’s Boom Years?," Working Papers 201016, Geary Institute, University College Dublin.
  5. John W. Budd & Brian P. McCall, 2001. "The Grocery stores wage distribution: A semi-parametric analysis of the role of retailing and labor market institutions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(2), pages 484-501, March.
  6. Sandén, Klas, 2007. "Risk, Occupational Choice, and Inequality," Working Papers in Economics 263, University of Gothenburg, Department of Economics.
  7. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.

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