Longitudinal Aspects of Earnings Inequality in Canada

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.