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Longitudinal Aspects of Earnings Inequality in Canada

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  • Berube, Charles
  • Morissette, Rene

Abstract

In this paper we ask the three following questions : 1) even after controlling for cyclical effects, do new spells of low earnings now last longer than they used to? 2) once a male worker starts a new spell of low earnings, does he receive lower real annual wages now than his counterparts did in the mid-seventies? 3) has long-term inequality in earnings risen in the eighties? The answers to these questions are the following. First, even after taking account of the relatively high unemployment rates observed since the mid-eighties, it was harder for Canadian male workers, especially those aged 18-24, to move out of the bottom of the earnings distribution during the 1985-93 period than during the 1975-84 period. In other terms, new spells of low earnings now last longer for these workers. Second, real annual wages received by young males who went through a new spell of low earnings were significantly lower in 1985-93 than in 1975-84. Third, during the eighties, inequality in earnings cumulated over either six or ten years rose at the same pace as inequality in annual earnings.

Suggested Citation

  • Berube, Charles & Morissette, Rene, 1996. "Longitudinal Aspects of Earnings Inequality in Canada," Analytical Studies Branch Research Paper Series 1996094e, Statistics Canada, Analytical Studies Branch.
  • Handle: RePEc:stc:stcp3e:1996094e
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    File URL: http://www5.statcan.gc.ca/olc-cel/olc.action?ObjId=11F0019M1996094&ObjType=46&lang=en&limit=0
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    References listed on IDEAS

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    1. Kevin M. Murphy & Finis Welch, 1992. "The Structure of Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 285-326.
    2. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, edition 1, volume 1, number 026202375x, January.
    3. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    4. Hungerford, Thomas L, 1993. "U.S. Income Mobility in the Seventies and Eighties," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(4), pages 403-417, December.
    5. Peter Gottschalk & Robert Moffitt, 1994. "The Growth of Earnings Instability in the U.S. Labor Market," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(2), pages 217-272.
    6. Patricia Smith, 1994. "Recent patterns in downward income mobility: Sinking boats in a rising tide," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 31(3), pages 277-303, March.
    7. Morissette, Rene, 1995. "Why Has Inequality in Weekly Earnings Increased in Canada?," Analytical Studies Branch Research Paper Series 1995080e, Statistics Canada, Analytical Studies Branch.
    8. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
    9. Greg J. Duncan & Timothy M. Smeeding & Willard Rodgers, 1991. "Whither the Middle Class'? A Dynamic View," Economics Working Paper Archive wp_56, Levy Economics Institute.
    10. 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.
    11. Beach, C.M. & Slotsve, G.A., 1994. "Polarization of Earnings in the Canadian Labour Market: A Non-Microdata Approach," Working Papers 17, John Deutsch Institute for the Study of Economic Policy.
    12. Doiron, Denise J & Barrett, Garry F, 1996. "Inequality in Male and Female Earnings: The Role of Hours and Wages," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 410-420, August.
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    Citations

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    Cited by:

    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. Sharpe, Andrew & Zyblock, Myles, 1997. "Macroeconomic performance and income distribution in Canada," The North American Journal of Economics and Finance, Elsevier, vol. 8(2), pages 167-199.
    3. Baker, Michael & Fortin, Nicole, 2000. "The Gender Composition and Wages: Why is Canada Different from the United States?," Analytical Studies Branch Research Paper Series 2000140e, Statistics Canada, Analytical Studies Branch.
    4. Charles Beach & Ross Finnie, 2004. "A longitudinal analysis of earnings change in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 37(1), pages 219-240, February.
    5. Finnie, Ross, 2002. "Early Labour Market Outcomes of Recent Canadian University Graduates by Discipline: A Longitudinal, Cross-cohort Analysis," Analytical Studies Branch Research Paper Series 2002164e, Statistics Canada, Analytical Studies Branch.
    6. Bernier, Rachel, 1998. "The Dimensions of Wage Inequality Among Aboriginal Peoples," Analytical Studies Branch Research Paper Series 1997109e, Statistics Canada, Analytical Studies Branch.
    7. Paul Beaudry & David A. Green, 2000. "Cohort patterns in Canadian earnings: assessing the role of skill premia in inequality trends," Canadian Journal of Economics, Canadian Economics Association, vol. 33(4), pages 907-936, November.
    8. 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.
    9. Ross Finnie, 2000. "From School to Work: The Evolution of Early Labour Market Outcomes of Canadian Postsecondary Graduates," Canadian Public Policy, University of Toronto Press, vol. 26(2), pages 197-224, June.
    10. repec:eee:labchp:v:3:y:1999:i:pb:p:2629-2710 is not listed on IDEAS

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