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Long-Run Earnings Inequality and Earnings Instability among Canadian Men Revisited, 1985-2005

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  • Ostrovsky Yuri

    () (Statistics Canada)

Abstract

I consider two flexible models of earnings dynamics suggested in the recent literature and alternative approaches to the treatment of left-censored observations to examine trends in the permanent and transitory variances of earnings of Canadian male workers from 1985 to 2005. I find that both permanent and transitory variances were higher in the 2000s than in the late 1980s or 1990s. In contrast to the late 1980s and the recession period of the early 1990s, both components of variance grew at a similar pace during the post-recession period, and the share of each component in the total variance remained fairly stable. The results are robust to the choice of a model. The study is based on a large sample from a uniquely rich longitudinal administrative dataset.

Suggested Citation

  • Ostrovsky Yuri, 2010. "Long-Run Earnings Inequality and Earnings Instability among Canadian Men Revisited, 1985-2005," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-34, March.
  • Handle: RePEc:bpj:bejeap:v:10:y:2010:i:1:n:20
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    References listed on IDEAS

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    1. Marc Frenette & David A. Green & Kevin Milligan, 2007. "The tale of the tails: Canadian income inequality in the 1980s and 1990s," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 734-764, August.
    2. Michael Baker & Gary Solon, 2003. "Earnings Dynamics and Inequality among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 267-288, April.
    3. Haider, Steven J, 2001. "Earnings Instability and Earnings Inequality of Males in the United States: 1967-1991," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 799-836, October.
    4. Robert A. Moffitt & Peter Gottschalk, 2002. "Trends in the Transitory Variance of Earnings in the United States," Economic Journal, Royal Economic Society, vol. 112(478), pages 68-73, March.
    5. 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, vol. 29(s1), pages 41-64, January.
    6. Clark, Todd E, 1996. "Small-Sample Properties of Estimators of Nonlinear Models of Covariance Structure," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(3), pages 367-373, July.
    7. Baker, Michael, 1997. "Growth-Rate Heterogeneity and the Covariance Structure of Life-Cycle Earnings," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 338-375, April.
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    Cited by:

    1. Giesecke, Matthias & Bönke, Timm & Lüthen, Holger, 2011. "The Dynamics of Earnings in Germany: Evidence from Social Security Records," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48692, Verein für Socialpolitik / German Economic Association.
    2. B. Cecilia Garcia-Medina & Jean-Francois Wen, "undated". "Income Instability and Fiscal Progression," Working Papers 2015-01, Department of Economics, University of Calgary, revised 12 Jan 2015.
    3. Ostrovsky, Yuri, 2012. "The correlation of spouses' permanent and transitory earnings and family earnings inequality in Canada," Labour Economics, Elsevier, vol. 19(5), pages 756-768.
    4. Paula Garda & Volker Ziemann, 2014. "Economic Policies and Microeconomic Stability: A Literature Review and Some Empirics," OECD Economics Department Working Papers 1115, OECD Publishing.
    5. Blundell, Richard & Graber, Michael & Mogstad, Magne, 2015. "Labor income dynamics and the insurance from taxes, transfers, and the family," Journal of Public Economics, Elsevier, vol. 127(C), pages 58-73.
    6. Robert A. Moffitt & Peter Gottschalk, 2012. "Trends in the Transitory Variance of Male Earnings: Methods and Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 47(1), pages 204-236.

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