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Cohort, Year and Age Effects in Canadian Wage Data

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  • J.B. Burbidge
  • L. Magee
  • A.L. Robb

Abstract

We use Canadian SCFs 1971-1993 to study the wages of full-time, full-year male and female workers. Median real wages of 24-year-old males without a university degree fell by 25% between 1978 and 1993. For 24-year-old females the decline was more modest and reversed in 1987, but real wages in 1993 were still significantly lower than they were in 1978. We investigate whether these changes are permanent “cohort” effects or more temporary “year” effects. Graphs of median wages against year and age indicate some periods where year effects are more prominent than cohort effects and other periods where the reverse is true. We then compare the results from two models, one assigning the trends to year effects, the other assigning them to cohort effects, and use these models to produce real wage projections.

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Paper provided by McMaster University in its series Canadian International Labour Network Working Papers with number 13.

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Length: 48 pages
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Handle: RePEc:mcm:cilnwp:13

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References

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  1. Burbidge, John B & Magee, Lonnie & Robb, A Leslie, 1997. "Canadian Wage Inequality over the Last Two Decades," Empirical Economics, Springer, Springer, vol. 22(2), pages 181-203.
  2. Angus Deaton & Christina H. Paxson, 1993. "Saving, Growth, and Aging in Taiwan," NBER Working Papers 4330, National Bureau of Economic Research, Inc.
  3. A Gosling & Stephen Machin, 1995. "The Changing Distribution of Male Wages in the UK," CEP Discussion Papers dp0271, Centre for Economic Performance, LSE.
  4. Auerbach, Alan J & Kotlikoff, Laurence J & Skinner, Jonathan, 1983. "The Efficiency Gains from Dynamic Tax Reform," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 24(1), pages 81-100, February.
  5. Paul Beaudry & David Green, 1997. "Cohort Patterns in Canadian Earnings: Assessing the Role of Skill Premia in Inequality Trends," NBER Working Papers 6132, National Bureau of Economic Research, Inc.
  6. A. L. Robb & L. Magee & J. B. Burbidge, 1992. "Kernel Smoothed Consumption-Age Quantiles," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 25(3), pages 669-80, August.
  7. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
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Cited by:
  1. Elena Giarda, 2008. "The worsening of wage expectations in Italy: a study based on administrative data," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 29(1), pages 64-87, May.
  2. Thomas F. Crossley & Yuri Ostrovsky, 2003. "A Synthetic Cohort Analysis of Canadian Housing Careers," Social and Economic Dimensions of an Aging Population Research Papers, McMaster University 107, McMaster University.
  3. Lonnie Magee & John Burbidge & Les Robb, 2000. "The Correlation Between Husband's and Wife's Education: Canada, 1971-1996," Quantitative Studies in Economics and Population Research Reports, McMaster University 353, McMaster University.
  4. Sung-Hee Jeon, 2004. "The impacts of the 1988 tax reform on married women's labour supply in Canada," Department of Economics Working Papers 2004-19, McMaster University.
  5. Paul Beaudry & David A. Green, 2000. "Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 33(4), pages 907-936, November.
  6. Marenglen Marku & Djavad Salehi-Isfahani, 2006. "Reversal of fortunes: a cohort analysis of lifetime earnings in Iran," Working Papers e06-1, Virginia Polytechnic Institute and State University, Department of Economics.

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