The labour market in the 1990s, part II. Distributional outcomes: who is winning and losing

• Published in: Canadian economic observer Vol. 13; no. 2; p. 3.8
• Main Authors: Heisz, Andrew, Picot, G
• Format: Journal Article
• Language: English
• Published: Ottawa Statistics Canada 01.02.2000
• Subjects: 1990-1999; Age; Decade reviews; Earnings; Education; Educational attainment; Employment; Immigrants; Income; Inequality; Labor force; Labor market; Labor supply; Noncitizens; Older workers; Skilled workers; Statistics; Technological change; Trends; Unemployment; University graduates; Wages & salaries; Women; Younger workers
• ISSN: 0835-9148; 1705-0189

Cross-sectional data clearly indicate an increasing earnings gap between younger and older workers during the 1980s and 1990s, particularly among men (Picot, 1998). Real annual earnings of men under 35 fell through both the recessions of the early 1980s and 1990s, and did not recover during the expansions at least to the mid-1990s. Meanwhile, earnings rose among older men, further increasing the wage gap. Young workers are not the only new entrants to the labour market, as recent immigrants constitute a growing source. Their fall in earnings was very similar to those of youths, and their employment rates dipped for each successive cohort over the 1980s and 1990s, particularly among men. Figure 2 shows the employment and earnings patterns of prime-aged and university-educated recent immigrants (age and education are controlled for in these comparisons). The charts display employment and earnings among immigrants compared with Canadian-born. Among male university graduates, both the share who are employed and the earnings of those employed relative to all workers have been falling. The employment/population ratio fell steadily from 91% of their Canadian counterparts in 1986 to 80% by 1996, while their relative earnings fell from 0.72 to 0.55. For women, they fell between 1991 and 1996, while for men they have fallen steadily since the mid-1980s. Compositional changes could influence these results, but it seems unlikely that they would account for them since this particular group (university-educated men and women aged 25-44) is likely quite comparable through time. Just as with young men, those who are immigrants saw a similar deterioration in their labour market success. Earnings growth was mostly positive for women and negative for men in the 1990s. Is this reflected in employment and unemployment outcomes? We focus on prime aged workers (25 to 54 years old) as there may be special factors affecting younger workers (changing employment patterns among students) and older workers (increasing early retirements). The position of prime aged men deteriorated while that of women improved between 1986-88 and 1996-98 (periods roughly an equal number of years into recovery). Labour force participation fell 2.9% for men and rose 6.7% for women. The unemployment rate rose for men and fell for women, so that while unemployment was higher among women than men during the 1980s, this was reversed by the late 1990s. The employment/population ratio fell for men and rose for women. The one statistic which was negative for women was a 10% rise in unemployment duration, while it declined marginally for men. These changes were more than offset by increases in the incidence of unemployment among men and declines for women.