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The Instability of Family Earnings and Family Income in Canada, 1986 to 1991 and 1996 to 2001

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  • Morissette, Rene
  • Ostrovsky, Yuri

Abstract

We investigate how family earnings instability has evolved between the late 1980s and the late 1990s and how family income instability varies across segments of the (family-level) earnings distribution. We uncover four key patterns. First, among the subset of families who were intact over the 1982-1991 and 1992-2001 periods, family earnings instability changed little between the late 1980s and the late 1990s. Second, the dispersion of families' permanent earnings became much more unequal during that period. Third, families who were in the bottom tertile of the (age-specific) earnings distribution in 1992-1995 had, during the 1996-2001 period, much more unstable market income than their counterparts in the top tertile. Fourth, among families with husbands aged under 45, the tax and transfer system has, during the 1996-2001 period, eliminated at least two-thirds (and up to all) of the differences in instability (measured in terms of proportional income gains/losses) in family market income that were observed during that period between families in the bottom tertile and those in the top tertile. This finding highlights the key stabilization role played by the tax and transfer system, a feature that has received relatively little attention during the 1990s when Employment Insurance (EI) (formerly known as Unemployment Insurance (UI)) and Social Assistance were reformed.

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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 2005265e.

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Date of creation: 02 Nov 2005
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Handle: RePEc:stc:stcp3e:2005265e

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Web page: http://www.statcan.gc.ca
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Keywords: Household; family and personal income; Income; pensions; spending and wealth; Labour; Wages; salaries and other earnings;

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References

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Cited by:
  1. Larochelle-Cote, Sebastien & Heisz, Andrew, 2006. "Work Hours Instability in Canada," Analytical Studies Branch Research Paper Series 2006278e, Statistics Canada, Analytical Studies Branch.

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