Skill Differentials in Canada in an Era of Rising Labor Market Inequality
In: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States
This paper examines educational earnings differentials in Canada in the 1980s and compares changes in differentials to those in the United States. Our major finding is that the college/high school differential increased much less in Canada than in the United States. We also find that within educational groups the distribution of earnings widened, gender pay gaps narrowed, and age pay gaps increased in Canada as in the United States. The greater growth of the college graduate proportion of the work force in Canada than in the United States is one important reason why differentials rose more modestly in Canada than in the United States. The greater strength of Canadian unions in wage-setting, and the faster growth of real national output, and better trade balance in Canada may also have contributed to the lesser rise in differentials. Because Canada and the United States have so many characteristics in common, we interpret our results as indicating that the massive rise of skill differentials in the United States was not the result of some inexorable shift in the economic structure of advanced capitalist countries, but rather reflected specific developments in the U.S. labor market and the way in which the country's decentralised wage-setting system adjusted to these developments.
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|This chapter was published in: ||This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number
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- Ashenfelter, Orley & Card, David, 1986. "Why Have Unemployment Rates in Canada and the United States Diverged?," Economica, London School of Economics and Political Science, vol. 53(210(S)), pages 171-195, Supplemen.
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- Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December.
- Vaillancourt, F. & Henriques, I., 1986. "The Returns to University Schooling in Canada," Cahiers de recherche 8608, Universite de Montreal, Departement de sciences economiques.
- Martin D. Dooley, 1986. "The Overeducated Canadian? Changes in the Relationship among Earnings, Education, and Age for Canadian Men: 1971-81," Canadian Journal of Economics, Canadian Economics Association, vol. 19(1), pages 142-159, February.
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
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