Earnings Mobility in Canada

Abstract

This paper reports the results of an empirical analysis of the earnings mobility of Canadians from 1982 to 1992 using the recently developed Longitudinal Administrative Database, constructed from individuals' tax files. After presenting some cross-sectional trends in individuals' earnings levels and earnings inequality to set the stage, the mobility analysis is carried out principally in terms of transition matrices that capture individuals' relative positions in the overall earnings distribution in one year versus another. These are calculated over intervals of various lengths and over different periods of time, with much of the analysis broken down by not only age and sex, but also by individuals' starting places in the earnings distribution, all of which turn out to be very important to understanding the structure of earnings mobility. Various implications of the findings are discussed.