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The Declining Labour Market Outcomes of the Less Skilled: Can Fiscal Policy Make a Difference?

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  • Peter Kuhn

Abstract

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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  • Peter Kuhn, 1998. "The Declining Labour Market Outcomes of the Less Skilled: Can Fiscal Policy Make a Difference?," Canadian Public Policy, University of Toronto Press, vol. 24(3), pages 370-377, September.
    • Handle: RePEc:cpp:issued:v:24:y:1998:i:3:p:370-377
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