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The correlation of spouses' permanent and transitory earnings and family earnings inequality in Canada

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  • Ostrovsky, Yuri

Abstract

I develop a very flexible error-component model of family earnings dynamics to examine recent Canadian trends in the variance of family earnings and its components using the ‘permanent-transitory’ analytical framework. In contrast to most studies of family earnings inequality, the main focus of this paper is on the trends in the correlation between spouses' permanent and transitory earnings. I find strong evidence of an increase in the correlation of spouses' permanent earnings before 1993 and no evidence of such an increase after 1993. However, the correlation of spouses' transitory earnings steadily increased throughout the 1990s and well into the 2000s.

Suggested Citation

  • Ostrovsky, Yuri, 2012. "The correlation of spouses' permanent and transitory earnings and family earnings inequality in Canada," Labour Economics, Elsevier, vol. 19(5), pages 756-768.
    • Handle: RePEc:eee:labeco:v:19:y:2012:i:5:p:756-768
    DOI: 10.1016/j.labeco.2012.07.005
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    Cited by:

    1. Paul Bingley & Lorenzo Cappellari, 2019. "Correlation of Brothers' Earnings and Intergenerational Transmission," The Review of Economics and Statistics, MIT Press, vol. 101(2), pages 370-383, May.
    2. Bingley, Paul & Cappellari, Lorenzo, 2012. "Alike in Many Ways: Intergenerational and Sibling Correlations of Brothers' Earnings," IZA Discussion Papers 6987, Institute of Labor Economics (IZA).
    3. Nicolas Frémeaux & Arnaud Lefranc, 2020. "Assortative Mating and Earnings Inequality in France," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(4), pages 757-783, December.
    4. Blundell, Richard & Graber, Michael & Mogstad, Magne, 2015. "Labor income dynamics and the insurance from taxes, transfers, and the family," Journal of Public Economics, Elsevier, vol. 127(C), pages 58-73.
    5. Yuri Ostrovsky, 2020. "Testing functional forms of the lifetime income process in the presence of factor loadings," Empirical Economics, Springer, vol. 59(1), pages 1-10, July.
    6. Reham Rizk & Hala Abou-Ali, 2015. "Informality and Socio-Economic Well-Being of Women in Egypt," Working Papers 910, Economic Research Forum, revised May 2015.
    7. repec:ctc:serie1:def6 is not listed on IDEAS
    8. Henry R. Hyatt, 2015. "Co-Working Couples and the Similar Jobs of Dual-Earner Households," Working Papers 15-23, Center for Economic Studies, U.S. Census Bureau.
    9. Henry R. Hyatt, 2015. "Co-Working Couples and the Similar Jobs of Dual-Earner Households," Working Papers 15-23r, Center for Economic Studies, U.S. Census Bureau.

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    More about this item

    Keywords

    Family earnings; Earnings inequality; Covariance structure; Assortative mating; Permanent earnings; Transitory earnings;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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