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Longitudinal Aspects of Earnings Inequality in Canada

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  • Berube, Charles
  • Morissette, Rene
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    Abstract

    In this paper we ask the three following questions : 1) even after controlling for cyclical effects, do new spells of low earnings now last longer than they used to? 2) once a male worker starts a new spell of low earnings, does he receive lower real annual wages now than his counterparts did in the mid-seventies? 3) has long-term inequality in earnings risen in the eighties? The answers to these questions are the following. First, even after taking account of the relatively high unemployment rates observed since the mid-eighties, it was harder for Canadian male workers, especially those aged 18-24, to move out of the bottom of the earnings distribution during the 1985-93 period than during the 1975-84 period. In other terms, new spells of low earnings now last longer for these workers. Second, real annual wages received by young males who went through a new spell of low earnings were significantly lower in 1985-93 than in 1975-84. Third, during the eighties, inequality in earnings cumulated over either six or ten years rose at the same pace as inequality in annual earnings.

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    Bibliographic Info

    Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 1996094e.

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    Date of creation: 30 Aug 1996
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    Handle: RePEc:stc:stcp3e:1996094e

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    Related research

    Keywords: Labour; Labour mobility; turnover and work absences; Wages; salaries and other earnings; Work transitions and life stages;

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    1. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026202375x, December.
    2. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 217-272.
    3. Beach, C.M. & Slotsve, G.A., 1994. "Polarization of Earnings in the Canadian Labour Market: A Non-Microdata Approach," Working Papers, John Deutsch Institute for the Study of Economic Policy 17, John Deutsch Institute for the Study of Economic Policy.
    4. Hungerford, Thomas L, 1993. "U.S. Income Mobility in the Seventies and Eighties," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 403-17, December.
    5. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
    6. Morissette, Rene, 1995. "Why Has Inequality in Weekly Earnings Increased in Canada?," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1995080e, Statistics Canada, Analytical Studies Branch.
    7. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 26(2), pages 646-79, June.
    8. 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.
    9. Greg J. Duncan & Timothy M. Smeeding & Willard Rodgers, 1991. "Whither the Middle Class'? A Dynamic View," Economics Working Paper Archive, Levy Economics Institute wp_56, Levy Economics Institute.
    10. Patricia Smith, 1994. "Recent patterns in downward income mobility: Sinking boats in a rising tide," Social Indicators Research, Springer, Springer, vol. 31(3), pages 277-303, March.
    11. Doiron, Denise J & Barrett, Garry F, 1996. "Inequality in Male and Female Earnings: The Role of Hours and Wages," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 410-20, August.
    12. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 107(1), pages 285-326, February.
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    Cited by:
    1. Michael Baker & Gary Solon, 1998. "Earnings Dynamics and Inequality among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records," Working Papers, University of Toronto, Department of Economics baker-98-01, University of Toronto, Department of Economics.
    2. Sharpe, Andrew & Zyblock, Myles, 1997. "Macroeconomic performance and income distribution in Canada," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 8(2), pages 167-199.
    3. Finnie, Ross, 2002. "Early Labour Market Outcomes of Recent Canadian University Graduates by Discipline: A Longitudinal, Cross-cohort Analysis," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2002164e, Statistics Canada, Analytical Studies Branch.
    4. Ross Finnie, 2000. "From School to Work: The Evolution of Early Labour Market Outcomes of Canadian Postsecondary Graduates," Canadian Public Policy, University of Toronto Press, University of Toronto Press, vol. 26(2), pages 197-224, June.
    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. Finnie, Ross & Beach, Charles M., 2004. "A Longitudinal Analysis of Earnings Change in Canada," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2004227e, Statistics Canada, Analytical Studies Branch.
    7. Charles M. Beach & Ross Finnie & David Gray, 2003. "Earnings Variability and Earnings Instability of Women and Men in Canada: How Do the 1990s Compare to the 1980s?," Canadian Public Policy, University of Toronto Press, University of Toronto Press, vol. 29(s1), pages 41-64, January.
    8. Fortin, Nicole & Baker, Michael, 2000. "The Gender Composition and Wages: Why is Canada Different from the United States?," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2000140e, Statistics Canada, Analytical Studies Branch.
    9. Bernier, Rachel, 1998. "The Dimensions of Wage Inequality Among Aboriginal Peoples," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1997109e, Statistics Canada, Analytical Studies Branch.

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