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

Michael Baker¹; Gary Solon²

¹ University of Toronto · ² University of Michigan–Ann Arbor

Using an extraordinary database drawn from longitudinal income tax records, we decompose Canada’s 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. The Canadian data strongly reject several restrictions commonly imposed in the U.S. literature, and they also suggest that imposing these evidently false restrictions may lead to distorted inferences about earnings dynamics and inequality trends.

DOI

10.1086/345559

Volume

21 (2)

Pages

289-321

Language

en

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BibTeX

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