TY  - JOUR
AU  - Baker,Michael
AU  - Solon,Gary
TI  - Earnings Dynamics and Inequality among Canadian Men, 1976-1992:  Evidence from Longitudinal Income Tax Records
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7370
PY  - 1999
Y2  - September 1999
UR  - http://www.nber.org/papers/w7370
L1  - http://www.nber.org/papers/w7370.pdf
N1  - Author contact info:
Michael Baker
Department of Economics
University of Toronto
150 St. George Street
Toronto, ON M5S 3G7
CANADA
Tel: 416/978-4138
Fax: 416/978-6713
E-Mail: baker@chass.utoronto.ca

Gary Solon
Department of Economics
Michigan State University
East Lansing, MI 48824-1038
Tel: 517/353-9933
Fax: 517/432-1068
E-Mail: solon@msu.edu
AB  - 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. The large size of our earnings panel allows us to estimate and test richer models of earnings dynamics than could be supported by the relatively small panel surveys used in U.S. research.  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.
ER  -