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Four Decades of Canadian Earnings Inequality and Dynamics across Workers and Firms

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  • Audra Bowlus
  • Émilien Gouin-Bonenfant
  • Huju Liu
  • Lance Lochner
  • Youngmin Park

Abstract

This paper studies the evolution of individual earnings inequality and dynamics in Canada from 1983 to 2016 using tax files and administrative records. Linking these individuals to their employers (and rich administrative records on firms) beginning in 2001, it also documents the relationship between the earnings dynamics of workers and the size and growth of their employers. It highlights three main patterns over this period: First, with a few exceptions (sharp increase in top 1% and declining gender gap), Canada has experienced relatively modest changes in overall earnings inequality, volatility, and mobility between 1983 and 2016. Second, there is considerable variability in earnings inequality and volatility over the business cycle. Third, the earnings dynamics of individuals are strongly related to the size and employment growth of their employers.

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  • Audra Bowlus & Émilien Gouin-Bonenfant & Huju Liu & Lance Lochner & Youngmin Park, 2021. "Four Decades of Canadian Earnings Inequality and Dynamics across Workers and Firms," NBER Working Papers 28757, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28757
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    Cited by:

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    3. Andrés Blanco & Bernardo Diaz de Astarloa & Andres Drenik & Christian Moser & Danilo R. Trupkin, 2022. "The evolution of the earnings distribution in a volatile economy: Evidence from Argentina," Quantitative Economics, Econometric Society, vol. 13(4), pages 1361-1403, November.
    4. Garbinti, Bertrand & García-Peñalosa, Cecilia & Pecheu, Vladimir & Savignac, Frederique, 2023. "Trends and Inequality in Lifetime Earnings in France," CEPR Discussion Papers 18472, C.E.P.R. Discussion Papers.
    5. Niklas Engbom & Gustavo Gonzaga & Christian Moser & Roberta Olivieri, 2022. "Earnings inequality and dynamics in the presence of informality: The case of Brazil," Quantitative Economics, Econometric Society, vol. 13(4), pages 1405-1446, November.
    6. Serdar Birinci & Youngmin Park & Thomas Pugh & Kurt See, 2023. "Uncovering the Differences among Displaced Workers: Evidence from Canadian Job Separation Records," Working Papers 2023-022, Federal Reserve Bank of St. Louis, revised Oct 2023.
    7. Sarah Burkinshaw & Yaz Terajima & Carolyn A. Wilkins, 2022. "Income Inequality in Canada," Discussion Papers 2022-16, Bank of Canada.
    8. Søren Leth‐Petersen & Johan Sæverud, 2022. "Inequality and dynamics of earnings and disposable income in Denmark 1987–2016," Quantitative Economics, Econometric Society, vol. 13(4), pages 1493-1526, November.
    9. Fatih Guvenen & Luigi Pistaferri & Giovanni L. Violante, 2022. "Global trends in income inequality and income dynamics: New insights from GRID," Quantitative Economics, Econometric Society, vol. 13(4), pages 1321-1360, November.
    10. Cook, Nikolai, 2024. "Increasing student access through aid: Differences in difference-in-differences estimates," Economics Letters, Elsevier, vol. 238(C).
    11. Elin Halvorsen & Serdar Ozkan & Sergio Salgado, 2022. "Earnings dynamics and its intergenerational transmission: Evidence from Norway," Quantitative Economics, Econometric Society, vol. 13(4), pages 1707-1746, November.
    12. Siqi Wei, 2022. "Income, Employment and Health Risks of Older Workers," Working Papers wp2022_2205, CEMFI.
    13. Felipe Alves & Sushant Acharya, 2024. "How changes in the share of constrained households affect the effectiveness of monetary policy," Staff Analytical Notes 2024-3, Bank of Canada.

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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