The Declining Labour Market Outcomes of the Less Skilled: Can Fiscal Policy Make a Difference?
Peter Kuhn ()
Canadian Public Policy, 1998, vol. 24, issue 3, 370-377
Since the mid-1970s, unskilled Canadian men have experienced very sizeable reductions in real wages, and they now work substantially fewer weeks per year. This article discusses a wide range of possible policy responses to this phenomenon, arguing that the best short-term response is the expansion of earned-income tax credits, and the best long-term response involves improvements in the basic skills provided by our education system. At the same time, it argues that drastic short-term responses are not warranted because (i) recent trends in male wage inequality have, to a large extent, simply undone a major compression in male wages that occurred in the early 1970s; and (ii) these trends may be part of a broader shift in the labour market that has also produced some important winners, especially skilled women, whose labour-market prospects have dramatically improved.
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