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

earnings experience since the early 1980s. Each gender is also divided into
four age groups: entry workers (age 20-24), younger workers (age 25-34),
prime age workers (age 35-54), and older workers (age 55-64). This allows
one to see how mobility patterns vary across the life cycle and how these
dynamics vary over the business cycle for the different age groups. The 1996
age breakdown is as follows (in thousands of observations):

The subsamples in 1996 vary from 49,310 to 354,110 observations each.
The numbers in earlier years reflect demographic change with larger numbers
of younger workers and smaller numbers of prime age workers than in 1996.

In dividing the earnings distribution into lower, middle and upper regions
(henceforth “earnings intervals” or EIs), various cut-off levels are used:
• Below 25% of median (“Very low”)

• 25-50% of median (“Low”)

• 50-100% of median (“Low middle”)

•   100-150% of median (“High middle”)

•  150-200% of median (“High”)

• Above 200% of median (“Very high”).

Following the convention in the polarization literature, the cut-offs are
expressed in terms of the median earnings level (rather than in terms of
quantiles such as earnings quintiles). In order to address the questions of
where various individuals lie in the overall distribution of earnings, or how
well women and men are doing in the overall earnings distribution, all cut-offs
are computed from a common median earnings level for the earnings dis-
tribution as a whole each year. Note that the median was virtually the same
(in real terms) in 1982 as in 1996 ($25.3 and $25.2 thousand, respectively, in
1996 dollars). So cut-off levels between the earnings intervals were also
essentially the same between the two end years. Median earnings also varied
remarkably little over the period — from a low of $24.7 thousand in 1984 to
a peak of $26 thousand in 1989. This reflects conflicting patterns for men and
women as men’s (higher) median earnings declined over the period since
1989 while women’s (lower) median earnings increased.

Cyclical Changes in Short-Run Earnings Mobility in Canada

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