Long-Run Inequality and Annual Instability of Men's and Women's Earnings in Canada
AbstractThis paper examines the variability of workers' earnings in Canada over the 1982-to-2000 period by a graphical descriptive approach using the Longitudinal Administrative Data base file. Following Gottschalk and Moffitt (1994), we decompose the total variance of workers' earnings into a 'permanent' or long-run component between workers and a 'transitory' or year-to-year earnings instability component over time for given workers. The decomposition is applied to a five-year moving window. Several results are found. First, the general rise in total earnings variance over the period reflects quite different patterns of change for its separate components. Long-run earnings inequality has generally increased over the period, while year-to-year earnings instability has pretty steadily decreased. Changes in the total earnings variability have been driven primarily by changes in long-run earnings inequality. Second, the patterns of change in the two variance components showed substantial differences between men and women. Since the early 1990s, long-run earnings inequality continued to rise for men, but it markedly decreased for women. Since the late 1980s, earnings instability fell quite steadily for women, but it showed a more cyclical pattern for men. Third, the patterns across ages of the two variance components are almost opposite. Long-run earnings inequality generally rises with age, so it is markedly highest among older-age workers. Earnings instability, in contrast, generally declines with age, so it is markedly highest among entry-age workers.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 1116.
Length: 46 pages
Date of creation: Jun 2006
Date of revision:
earnings inequality; earnings instability; long-run inequality;
Other versions of this item:
- Gray, David & Finnie, Ross & Beach, Charles M., 2008. "Long-run Inequality and Annual Instability of Men's and Women's Earnings in Canada," Analytical Studies Branch Research Paper Series 2008311e, Statistics Canada, Analytical Studies Branch.
- D3 - Microeconomics - - Distribution
- D6 - Microeconomics - - Welfare Economics
- J0 - Labor and Demographic Economics - - General
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- Gray, David & Finnie, Ross & Beach, Charles M., 2006. "The Impact of Macroeconomic Conditions on the Instability and Long-Run Inequality of Workers' Earnings in Canada," Analytical Studies Branch Research Paper Series 2006268e, Statistics Canada, Analytical Studies Branch.
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Boston College Working Papers in Economics
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