Cyclical Changes in Short-Run Earnings Mobility in Canada, 1982-1996

²ÀPvl+ÀPvh

³ÀPvl+ ÀPl

4ÀP_vH+ÀP_H

⁵ÀPvL

6ÀP_vH

where Pi represents the percentages of workers in earnings interval i.

period 1982-96, the latter attenuation has not recovered all the polarization
increases that occurred during the recessions — and this is especially so over
the 1990s. As a result, the increases in earnings polarization for men have
tended to follow a ratchet pattern over the period covered, notching up
significantly during recessions and then easing off relatively little over the
ensuing expansion. This does not bode well for when the next recession hits
the labour market.

It has been noted above that the earnings distribution for women has
generally shifted upward over the sample period, especially over the 1990s.
We now look at this more formally. Again from a cross-sectional perspec-
tive, this idea could be examined by looking at year-to-year changes in

(P_vH + P_H + P_HM) - (P_LM + P_L + P_vL)                         (3)

where again P_vH is the percentage of workers within the very high (vH)
earnings interval and the remaining percentages are defined accordingly.
Intuitively, a shift up of a distribution would show up as generally positive
changes in the upper set of interval shares and negative changes in the lower
set of interval shares. (Recall that the sum of all six shares is always 100 per
cent.) So an upward shift will typically be captured by a positive change in
the share formula (3), while a downward shift will tend to show up as a
negative change. Alternatively, since the biggest changes appear to have
occurred in the lower and upper interval shares, one could also look at the
more extreme measure of distributional shift

(PvH + PH) - (PL + PvL)                                        (4)

which concentrates on shifts at the two ends of the distribution. Since the
polarization measures may be dominated by shifts at only one end of a distri-
bution, it is useful to complement them by further measures of distributional
shift per se to see whether a distribution is more appropriately characterized
as generally moving up or moving down.

Table 3 presents estimates of changes in both these measures of upward/
downward distributional shift. One notices first the virtual absence of

Cyclical Changes in Short-Run Earnings Mobility in Canada

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