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Earnings Dynamics and Inequality Among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records

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  • Baker, Michael
  • Solon, Gary

Abstract

Several recent studies have found that earnings inequality in Canada has grown considerably since the late 1970's. Using an extraordinary data base drawn from longitudinal income tax records, we decompose this growth in earnings inequality into its persistent and transitory components. We find that the growth in earnings inequality reflects both an increase in long-run inequality and an increase in earnings instability. Our large sample size enables us to estimate and test richer models than could be supported by the relatively small panel surveys used in most previous research on earnings dynamics. For example, we are able to incorporate both heterogeneous earnings growth and a random-walk process in the same model, and we find that both are empirically significant.

Suggested Citation

  • Baker, Michael & Solon, Gary, 1999. "Earnings Dynamics and Inequality Among Canadian Men, 1976-1992: Evidence from Longitudinal Income Tax Records," Analytical Studies Branch Research Paper Series 1999130e, Statistics Canada, Analytical Studies Branch.
    • Handle: RePEc:stc:stcp3e:1999130e
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    Cited by:

    1. Robert Moffitt & Peter Gottschalk, 2008. "Trends in the Transitory Variance of Male Earnings in the U.S., 1970-2004," Boston College Working Papers in Economics 697, Boston College Department of Economics.
    2. James Feigenbaum, 2008. "A Nonparametric Characterization of Income Uncertainty over the Lifecycle," Working Paper 359, Department of Economics, University of Pittsburgh, revised Jul 2008.
    3. Doris, Aedin & O'Neill, Donal & Sweetman, Olive, 2008. "Does Growth Affect the Nature of Inequality? Ireland 1994–2001," IZA Discussion Papers 3701, Institute of Labor Economics (IZA).
    4. Bergin, Adele, 2009. "Job Mobility in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 40(1), pages 15-47.
    5. Nilsen, Øivind Anti & Vaage, Kjell & Aakvik, Arild & Jacobsen, Karl, 2008. "Estimates of Intergenerational Elasticities Based on Lifetime Earnings," IZA Discussion Papers 3709, Institute of Labor Economics (IZA).
    6. Michal Myck & Richard Ochmann & Salmai Qari, 2008. "Dynamics of Earnings and Hourly Wages in Germany," SOEPpapers on Multidisciplinary Panel Data Research 139, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Charles M. Beach & Ross Finnie, 2001. "Cyclical Changes in Short-Run Earnings Mobility in Canada, 1982-1996," The State of Economics in Canada: Festschrift in Honour of David Slater, in: Patrick Grady & Andrew Sharpe (ed.),The State of Economics in Canada: Festschrift in Honour of David Slater, pages 453-484, Centre for the Study of Living Standards.
    8. 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.
    9. Heshmati, Almas, 2004. "A Review of Decomposition of Income Inequality," IZA Discussion Papers 1221, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Labour; Labour mobility; turnover and work absences; Wages; salaries and other 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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