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Four Decades of Canadian Earnings Inequality and Dynamics across Workers and Firms

Author

Listed:
  • Audra Bowlus
  • Émilien Gouin-Bonenfant
  • Huju Liu
  • Lance Lochner
  • Youngmin Park

Abstract

This paper studies the evolution of individual earnings inequality and dynamics in Canada from 1983 to 2016 using tax files and administrative records. Linking these individuals to their employers (and rich administrative records on firms) beginning in 2001, it also documents the relationship between the earnings dynamics of workers and the size and growth of their employers. It highlights three main patterns over this period: First, with a few exceptions (sharp increase in top 1% and declining gender gap), Canada has experienced relatively modest changes in overall earnings inequality, volatility, and mobility between 1983 and 2016. Second, there is considerable variability in earnings inequality and volatility over the business cycle. Third, the earnings dynamics of individuals are strongly related to the size and employment growth of their employers.

Suggested Citation

  • Audra Bowlus & Émilien Gouin-Bonenfant & Huju Liu & Lance Lochner & Youngmin Park, 2021. "Four Decades of Canadian Earnings Inequality and Dynamics across Workers and Firms," NBER Working Papers 28757, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28757
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    Cited by:

    1. James Ashwell, 2021. "A Strengthening Position at the Bargaining Table? Understanding the Productivity-Median Wage Gap in Canada, 1976-2019," CSLS Research Reports 2021-09, Centre for the Study of Living Standards.
    2. Benoit Dostie & Genevieve Dufour, 2024. "Évolution de la distribution de la productivité des entreprises québécoises entre 2005 et 2019," CIRANO Project Reports 2024rp-19, CIRANO.
    3. Garbinti, Bertrand & García-Peñalosa, Cecilia & Pecheu, Vladimir & Savignac, Frederique, 2023. "Trends and Inequality in Lifetime Earnings in France," CEPR Discussion Papers 18472, C.E.P.R. Discussion Papers.
    4. Sylvain Catherine & Paolo Sodini & Yapei Zhang, 2024. "Countercyclical Income Risk and Portfolio Choices: Evidence from Sweden," Journal of Finance, American Finance Association, vol. 79(3), pages 1755-1788, June.
    5. James (Jim) C. MacGee & Joel Rodrigue, 2024. "The Distributional Origins of the Canada-US GDP and Labour Productivity Gaps," Staff Working Papers 24-49, Bank of Canada.
    6. Tomás R. Martinez & Antonio Martins-Neto & Ursula Mello, 2024. "Gender and Top Lifetime Earnings Inequality: Ten New Facts from Brazil," Business and Economics Working Papers 242, Unidade de Negocios e Economia, Insper.
    7. Serdar Birinci & Youngmin Park & Kurt See, 2023. "The Heterogeneous Impacts of Job Displacement: Evidence from Canadian Job Separation Records," Working Papers 2023-022, Federal Reserve Bank of St. Louis, revised 20 Oct 2025.
    8. Sarah Burkinshaw & Yaz Terajima & Carolyn A. Wilkins, 2022. "Income Inequality in Canada," Discussion Papers 2022-16, Bank of Canada.
    9. Andrés Blanco & Bernardo Diaz de Astarloa & Andres Drenik & Christian Moser & Danilo R. Trupkin, 2022. "The evolution of the earnings distribution in a volatile economy: Evidence from Argentina," Quantitative Economics, Econometric Society, vol. 13(4), pages 1361-1403, November.
    10. Søren Leth‐Petersen & Johan Sæverud, 2022. "Inequality and dynamics of earnings and disposable income in Denmark 1987–2016," Quantitative Economics, Econometric Society, vol. 13(4), pages 1493-1526, November.
    11. Darapheak Tin & Chung Tran & Nabeeh Zakariyya, 2025. "The Evolution of the Earnings Distribution in a Sustained Growth Economy: Evidence from Australia," ANU Working Papers in Economics and Econometrics 2025-704, Australian National University, College of Business and Economics, School of Economics.
    12. Fatih Guvenen & Luigi Pistaferri & Giovanni L. Violante, 2022. "Global trends in income inequality and income dynamics: New insights from GRID," Quantitative Economics, Econometric Society, vol. 13(4), pages 1321-1360, November.
    13. Cook, Nikolai, 2024. "Increasing student access through aid: Differences in difference-in-differences estimates," Economics Letters, Elsevier, vol. 238(C).
    14. Elin Halvorsen & Serdar Ozkan & Sergio Salgado, 2022. "Earnings dynamics and its intergenerational transmission: Evidence from Norway," Quantitative Economics, Econometric Society, vol. 13(4), pages 1707-1746, November.
    15. Niklas Engbom & Gustavo Gonzaga & Christian Moser & Roberta Olivieri, 2022. "Earnings inequality and dynamics in the presence of informality: The case of Brazil," Quantitative Economics, Econometric Society, vol. 13(4), pages 1405-1446, November.
    16. Siqi Wei, 2022. "Income, Employment and Health Risks of Older Workers," Working Papers wp2022_2205, CEMFI.
    17. Nuno Alves & Carlos Martins, 2025. "The anatomy of household income dynamics in Portugal," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    18. Felipe Alves & Sushant Acharya, 2024. "How changes in the share of constrained households affect the effectiveness of monetary policy," Staff Analytical Notes 2024-3, Bank of Canada.
    19. Ibrahim Bousmah, 2024. "Firm‐size wage‐gaps and hierarchy: Evidence from Canada," LABOUR, CEIS, vol. 38(3), pages 350-364, September.

    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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