Long-run Inequality and Annual Instability of Men's and Women's Earnings in Canada

David Gray, Ross Finnie and Charles M. Beach

Analytical Studies Branch Research Paper Series from Statistics Canada, Analytical Studies Branch

Abstract:

This paper examines the variability of workers' earnings in Canada over the 1982-to-2000 period by a graphical descriptive approach using the Longitudinal Administrative Data base file. Following Gottschalk and Moffitt (1994), we decompose the total variance of workers' earnings into a 'permanent' or long-run component between workers and a 'transitory' or year-to-year earnings instability component over time for given workers. The decomposition is applied to a five-year moving window. Several results are found. First, the general rise in total earnings variance over the period reflects quite different patterns of change for its separate components. Long-run earnings inequality has generally increased over the period, while year-to-year earnings instability has pretty steadily decreased. Changes in the total earnings variability have been driven primarily by changes in long-run earnings inequality. Second, the patterns of change in the two variance components showed substantial differences between men and women. Since the early 1990s, long-run earnings inequality continued to rise for men, but it markedly decreased for women. Since the late 1980s, earnings instability fell quite steadily for women, but it showed a more cyclical pattern for men. Third, the patterns across ages of the two variance components are almost opposite. Long-run earnings inequality generally rises with age, so it is markedly highest among older-age workers. Earnings instability, in contrast, generally declines with age, so it is markedly highest among entry-age workers.

Keywords: Labour; Wages; salaries and other earnings (search for similar items in EconPapers)
Date: 2008-12-18
New Economics Papers: this item is included in nep-bec and nep-lab
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Long-run Inequality And Annual Instability Of Men's And Women's Earnings In Canada (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:stc:stcp3e:2008311e

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