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What is Happening to Earnings, Inequality and Youth Wages in the 1990s?

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  • Picot, Garnett
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    Abstract

    The increase in earnings inequality among men in particular in Canada has been well documented. This paper adds to our knowledge of inequality trends by addressing three issues. First, what has happened to earnings inequality among the employed population in the 1990s? We find that earnings inequality and polarization increased little in the population of all workers (men and women combined) between the mid-1980s and mid-1990s. The second question relates to the impact of the changing propensity of Canadians to hold a job on earnings inequality. Put another way, if we focus on the entire population of working age Canadians (those with and without paid employment), what are the inequality trends. We find that earnings inequality among the working age population changed little over the 1980s and 1990s. This analysis incorporates both the influence of the changing employment/population ratio and inequality trends among employed workers on overall earnings inequality among the working age population. But this relative stability in overall earnings inequality since the mid-1980s masks a number of offsetting underlying trends. Some groups of workers are making earnings gains (notably older workers, and women) while others are losing (notably younger workers and men). This paper focuses in particular on the earnings trends among younger workers, and finds that the decline in annual earnings of younger male workers in particular is associated with a decline in real hourly wages.

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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 1998116e.

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    Date of creation: 29 Jun 1998
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    Handle: RePEc:stc:stcp3e:1998116e

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    Keywords: Children and youth; Globalization and the labour market; Hours of work and work arrangements; Labour; Labour market activities; Wages; salaries and other earnings;

    References

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    1. Lemieux, T., 1993. "Unions and Wages Inequality in Canada and the United States," Cahiers de recherche 9302, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.
    2. Beach, C.M. & Slotsve, G.A., 1994. "Polarization of Earnings in the Canadian Labour Market: A Non-Microdata Approach," Working Papers 17, John Deutsch Institute for the Study of Economic Policy.
    3. Steven J. Davis, 1992. "Cross-Country Patterns of Change in Relative Wages," NBER Working Papers 4085, National Bureau of Economic Research, Inc.
    4. Richard B. Freeman & Karen Needels, 1993. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 45-68 National Bureau of Economic Research, Inc.
    5. Picot, Garnett & Morissette, Rene & Kapsalis, Costa, 1999. "The Returns to Education and the Increasing Wage Gap Between Younger and Older Workers," Analytical Studies Branch Research Paper Series 1999131e, Statistics Canada, Analytical Studies Branch.
    6. Peter Kuhn & A. Leslie Robb, 1998. "Shifting Skill Demand and the Canada-US Unemployment Gap: Evidence from Prime-Age Men," Canadian Public Policy, University of Toronto Press, vol. 24(s1), pages 170-191, February.
    7. Murphy, Brian & Wolfson, Michael, 1998. "New Views on Inequality Trends in Canada and the United States," Analytical Studies Branch Research Paper Series 1998124e, Statistics Canada, Analytical Studies Branch.
    8. Morissette, Rene, 1995. "Why Has Inequality in Weekly Earnings Increased in Canada?," Analytical Studies Branch Research Paper Series 1995080e, Statistics Canada, Analytical Studies Branch.
    9. Riddell, W.C., 1993. "Unionization in Canada and the United States: A Tale of Two Countries," Papers 1993-1, Queen's at Kingston - Sch. of Indus. Relat. Papers in Industrial Relations.
    10. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February.
    11. Chinhui Juhn & Kevin M. Murphy & Robert H. Topel, 1991. "Why Has the Natural Rate of Unemployment Increased over Time?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 75-142.
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    Cited by:
    1. Brahim Boudarbat & Thomas Lemieux & W. Craig Riddell, 2010. "The Evolution of the Returns to Human Capital in Canada, 1980-2005," Canadian Public Policy, University of Toronto Press, vol. 36(1), pages 63-89, March.
    2. Larochelle-Cote, Sebastien & Heisz, Andrew, 2006. "Work Hours Instability in Canada," Analytical Studies Branch Research Paper Series 2006278e, Statistics Canada, Analytical Studies Branch.
    3. Heisz, Andrew, 2007. "Income Inequality and Redistribution in Canada: 1976 to 2004," Analytical Studies Branch Research Paper Series 2007298e, Statistics Canada, Analytical Studies Branch.
    4. Picot, Garnett & Heisz, Andrew & Nakamura, A., 2001. "Job Tenure, Worker Mobility and the Youth Labour Market During the 1990s," Analytical Studies Branch Research Paper Series 2001155e, Statistics Canada, Analytical Studies Branch.
    5. Matthias L├╝cke, 1999. "Sectoral Value Added Prices, TFP Growth, and the Low-Skilled Wage in High-Income Countries," Kiel Working Papers 923, Kiel Institute for the World Economy.
    6. Picot, Garnett & Sweetman, Arthur, 2005. "The Deteriorating Economic Welfare of Immigrants and Possible Causes: Update 2005," Analytical Studies Branch Research Paper Series 2005262e, Statistics Canada, Analytical Studies Branch.

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