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A longitudinal analysis of earnings change in Canada

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  • Charles M. Beach
  • Ross Finnie

Abstract

. We use tax‐based longitudinal microdata for 1982–99 to (i) examine how earnings distributions have shifted, (ii) identify changes in earnings mobility patterns, and (iii) replicate and update Beaudry and Green's cohort analysis of age‐earnings profiles. We find: (i) increased polarization of men's earnings and marked decline in real earnings of workers aged 20–4; (ii) general decline in men's earnings mobility, while women's mobility has increased for young and prime‐age workers; and (iii) upward drift in earnings profiles of 1960s–1970s entry cohorts and downward shifts for 1980s–1990s cohorts (largely confirming Beaudry and Green's findings), but suggestive of steepening profiles for the 1990s cohorts. JEL classification code : J31,O33 Une analyse longitudinale des changements de gains au Canada. Ce mémoire utilise des micro‐données longitudinales tirées des dossiers fiscaux de 1982 à 1999 (1) pour examiner comment les distributions de gains se sont déplacées, (2) pour identifier les changements dans les patterns de modification de gains et de mobilité, et (3) pour reprendre et mettre à jour l’analyse de Beaudry et Green faite à l’aide de cohortes de profils de gains selon l’âge à l’aide de ces données longitudinales. L’étude montre que (i) il y a polarisation accrue des gains des hommes et un déclin marqué dans les gains réels des travailleurs âgés de 20 à 24 ans; (ii) il y a un déclin général dans la mobilité des hommes alors que celle des femmes s’est accrue pour les travailleuses jeunes ou dans la force de l’âge; et (iii) il y a dérive à la hausse des profils de gains pour les cohortes entrant sur le marché du travail dans les années 1960 et 1970, une dérive à la baisse pour les cohortes entrant sur le marché du travail dans les années 1980 et 1990 (ce qui confirme les résultats de Beaudry et Green), mais des profils plus à pic pour les cohortes des années 1990.

Suggested Citation

  • Charles M. Beach & Ross Finnie, 2004. "A longitudinal analysis of earnings change in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(1), pages 219-240, February.
    • Handle: RePEc:wly:canjec:v:37:y:2004:i:1:p:219-240
    DOI: 10.1111/j.0008-4085.2004.012_1.x
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    References listed on IDEAS

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    1. 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.
    2. Miles Corak & Andrew Heisz, 1999. "The Intergenerational Earnings and Income Mobility of Canadian Men: Evidence from Longitudinal Income Tax Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 504-533.
    3. Moshe Buchinsky & Jennifer Hunt, 1999. "Wage Mobility In The United States," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 351-368, August.
    4. Dardanoni Valentino, 1993. "Measuring Social Mobility," Journal of Economic Theory, Elsevier, vol. 61(2), pages 372-394, December.
    5. Burkhauser, Richard V & Holtz-Eakin, Douglas & Rhody, Stephen E, 1997. "Labor Earnings Mobility and Inequality in the United States and Germany during the Growth Years of the 1980s," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 775-794, November.
    6. Bruce Richard Kennedy, 1989. "Mobility and Instability in Canadian Earnings," Canadian Journal of Economics, Canadian Economics Association, vol. 22(2), pages 383-394, May.
    7. Berube, Charles & Morissette, Rene, 1996. "Longitudinal Aspects of Earnings Inequality in Canada," Analytical Studies Branch Research Paper Series 1996094e, Statistics Canada, Analytical Studies Branch.
    8. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
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    Citations

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    Cited by:

    1. Abbott, Michael & Beach, Charles M., 2009. "Immigrant Earnings Distributions and Earnings Mobility in Canada: Evidence for the 1982 Landing Cohort from IMDB Micro Data," CLSSRN working papers clsrn_admin-2009-22, Vancouver School of Economics, revised 13 Mar 2009.
    2. Frank T Denton & Byron G Spencer & Terry A Yip, 2019. "Age-Income Dynamics Over The Life Course: Cohort Transition Patterns In Relative Income Based On Canadian Tax Returns," Department of Economics Working Papers 2019-02, McMaster University.
    3. Benoit Dostie & Genevieve Dufour & Raquel Fonseca & Étienne Lalé, 2020. "Évolution séculaire du profil des salaires en fonction de l’âge : Québec, Canada et États-Unis," CIRANO Project Reports 2020rp-21, CIRANO.
    4. David A. Green & James Townsend, 2010. "Understanding the wage patterns of Canadian less skilled workers: the role of implicit contracts," Canadian Journal of Economics, Canadian Economics Association, vol. 43(1), pages 373-403, February.
    5. Paolo Naticchioni & Michele Raitano & Claudia Vittori, 2016. "La Meglio Gioventù: earnings gaps across generations and skills in Italy," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 33(2), pages 233-264, August.
    6. Audra Bowlus & Émilien Gouin‐Bonenfant & Huju Liu & Lance Lochner & Youngmin Park, 2022. "Four decades of Canadian earnings inequality and dynamics across workers and firms," Quantitative Economics, Econometric Society, vol. 13(4), pages 1447-1491, November.
    7. McDonald, James Ted & Worswick, Christopher, 2013. "Retirement Incomes, Labour Supply and Co-residency Decisions of Older Immigrants in Canada: 1991-2006," CLSSRN working papers clsrn_admin-2013-23, Vancouver School of Economics, revised 29 Apr 2013.
    8. Gray, David & Finnie, Ross & Beach, Charles M., 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.
    9. Irvine, Ian & Finnie, Ross & Sceviour, Roger, 2004. "La dynamique de l'aide sociale au Canada : le role des attributs individuels et des variables economiques et politiques," Direction des études analytiques : documents de recherche 2004231f, Statistics Canada, Direction des études analytiques.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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