Earnings Variability and Earnings Instability of Women and Men in Canada: How Do the 1990's Compare to the 1980's (Working Paper 25)

It seems to be generally assumed that earnings instability has increased in the last decade or so, as earnings inequality has widened, but is this indeed the case, and if so, to what degree? This paper builds on earlier U.S. work to look at the total variance in individuals’ earnings with a focus on the distinction between permanent earnings variation associated with factors such as human capital investments or other persistent worker attributes, and transitory earnings variation or instability for a given individual from one year to another. We find that there was an increase in overall earnings variability, especially for men, but that the greatest part of this increase was driven by the permanent component – that is, by a widening dispersion of (life-cycle) earnings differentials across workers. The increased volatility of workers’ earnings about their life-cycle earnings profiles played a secondary role in the overall increase in men’s earnings variability, whereas for women this effect was very small or even worked in the opposite direction (depending on the particular age group). Patterns by age and region are also investigated.

Minorities, Measured Cognitive Skills and the Earnings of Canadians (Working Paper 26)

This paper uses the Statistics Canada Survey of Literacy Skills in Daily Use (LSUDA) to investigate minority-“white”(i.e., non-minority) income differences and the role education and English/French literacy and numeracy skills play in those patterns. There are three principal sets of findings. First, among males, some visible minority groups have substantially lower levels of the measured language and number skills than whites and other more economically successful minorities, and in some cases these differences play a significant role in explaining the observed income patterns. The minority-white income gaps are, however, much smaller for women, and the literacy and numeracy variables do not have much of a role to play in explaining those differences. Second, for men, the minority-white income gaps are largely confined to immigrants, and there are no significant differences amongst the native-born once various factors which affect incomes (including education and the literacy and numeracy measures) are taken into account. For women, though, minority-white income differences only emerge for certain Canadian-born groups when they are differentiated from immigrants, for whom different gaps become apparent. Finally, the measured returns to literacy and numeracy differ significantly by ethnic group and sex. Various implications of the findings are discussed.

Immigrant Earnings : Age at Immigration Matters (Working Paper 20)

A correlation between age at immigration and earnings is observed in Canadian census data. The evidence supports three underlying sources of the effect; first, work experience in the source country yields virtually no return in the host country; second, the return to education varies with age at immigration, and, finally, an “acculturation” effect is observed for immigrants who are visible minorities or whose mother tongue is not English. Further, it is found that educational attainment, and relatedly earnings, vary systematically across age at immigration with those arriving around age 15 to 18 obtaining fewer years of education. JEL codes: J61, J31.