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The Instability of Family Earnings and Family Income in Canada, 1986­1991 and 199­2001

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  • René Morissette
  • Yuri Ostrovsky

Abstract

We investigate how family earnings instability evolved between the late 1980s and the late 1990s and how family income instability varies across segments of the (family-level) earnings distribution. We uncover four key patterns. First, among the subset of families who were intact over the 1982­91 and 1992­2001 periods, family earnings instability changed little between the late 1980s and the late 1990s. Second, the dispersion of families' permanent earnings became much more unequal during that period. Third, families who were in the bottom tertile of the (age-specific) earnings distribution in 1992 to 1995 had, during the 1996­2001 period, much more unstable market income than their counterparts in the top tertile. Fourth, among families with husbands aged under 45, the tax and transfer system, during the 1996­2001 period, eliminated at least two-thirds (and up to all) of the differences in instability (measured in terms of proportional income gains/losses) in family market income that were observed during that period between families in the bottom tertile and those in the top tertile. This finding highlights the key stabilization role played by the tax and transfer system, a feature that received relatively little attention during the 1990s when (UI) EI and Social Assistance were reformed.

Suggested Citation

  • René Morissette & Yuri Ostrovsky, 2005. "The Instability of Family Earnings and Family Income in Canada, 1986­1991 and 199­2001," Canadian Public Policy, University of Toronto Press, vol. 31(3), pages 273-302, September.
  • Handle: RePEc:cpp:issued:v:31:y:2005:i:3:p:273-302
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    Cited by:

    1. B. Cecilia Garcia-Medina & Jean-François Wen, 2018. "Income instability and fiscal progression," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 419-451, May.
    2. Charles M. Beach & Ross Finnie & David Gray, 2010. "Long‐Run Inequality And Short‐Run Instability Of Men'S And Women'S Earnings In Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 572-596, September.
    3. Kim P. Huynh & Yuri Ostrovsky & Robert J. Petrunia & Marcel C. Voia, 2017. "Industry shutdown rates and permanent layoffs: evidence from firm-worker matched data," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-31, December.
    4. Heisz, Andrew & Larochelle-Cote, Sebastien, 2006. "Work Hours Instability in Canada," Analytical Studies Branch Research Paper Series 2006278e, Statistics Canada, Analytical Studies Branch.
    5. Ostrovsky, Yuri, 2008. "Earnings Inequality and Earnings Instability of Immigrants in Canada," Analytical Studies Branch Research Paper Series 2008309e, Statistics Canada, Analytical Studies Branch.
    6. Charles M. Beach, 2016. "Changing income inequality: A distributional paradigm for Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1229-1292, November.
    7. Marcelin Joanis & Edgard Rodriguez, 2013. "Public Redistribution and Inequality in a Period of Fiscal Consolidation: A Decomposition Analysis for Canada in the 1980s and 1990s," Economic Papers, The Economic Society of Australia, vol. 32(2), pages 218-238, June.

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