What is Happening to Earnings Inequality and Youth Wages in the 1990s?

The increase in earnings inequality among men in particular in Canada has been well documented. This paper adds to our knowledge of inequality trends by addressing three issues. First, what has happened to earnings inequality among the employed population in the 1990s? We find that earnings inequality and polarization increased little in the population of all workers (men and women combined) between the mid-1980s and mid-1990s. The second question relates to the impact of the changing propensity of Canadians to hold a job on earnings inequality. Put another way, if we focus on the entire population of working age Canadians (those with and without paid employment), what are the inequality trends. We find that earnings inequality among the working age population changed little over the 1980s and 1990s. This analysis incorporates both the influence of the changing employment/population ratio and inequality trends among employed workers on overall earnings inequality among the working age population. But this relative stability in overall earnings inequality since the mid-1980s masks a number of offsetting underlying trends. Some groups of workers are making earnings gains (notably older workers, and women) while others are losing (notably younger workers and men). This paper focuses in particular on the earnings trends among younger workers, and finds that the decline in annual earnings of younger male workers in particular is associated with a decline in real hourly wages.