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 Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2008311e.
Date of creation: 18 Dec 2008
Date of revision:
Labour; Wages; salaries and other earnings;
Other versions of this item:
- Charles Beach & Ross Finnie & David Gray, 2006. "Long-Run Inequality and Annual Instability of Men's and Women's Earnings in Canada," Working Papers 1116, Queen's University, Department of Economics.
- D3 - Microeconomics - - Distribution
- D6 - Microeconomics - - Welfare Economics
- J0 - Labor and Demographic Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-03 (All new papers)
- NEP-BEC-2009-01-03 (Business Economics)
- NEP-LAB-2009-01-03 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Beach, Charles M. Finnie, Ross Gray, David, 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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- Robert A. Moffitt & Peter Gottschalk, 2011. "Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004," NBER Working Papers 16833, National Bureau of Economic Research, Inc.
- Robert Moffitt & Peter Gottschalk, 2011. "Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004," Economics Working Paper Archive 578, The Johns Hopkins University,Department of Economics.
- Sisi Zhang, 2010. "Recent Trends in Household Income Dynamics for the United States, Germany and Great Britain," Economics Bulletin, AccessEcon, vol. 30(2), pages 1154-1172.
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