Executive summary
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This study examines how real wages of Canadian workers evolved from 1981 to 2011, with a focus on trends between 1981 to 1998 and 1998 to 2011. The main findings can be summarized as follows:
- Although women today still earn relatively less than men on average, the gender hourly wage gap decreased significantly over the last three decades. Relative to men, women increased their productivity-enhancing characteristics at a faster pace than men did. Virtually all of the decline in the gender wage gap over the 1981-to-1998 period can be accounted for by this process. During the more recent 1998-to-2011 period, differential changes in education, job tenure, occupation, and union status accounted for about half of the narrowing of the gap;
- From 1981 to 1998, average wages of men and women aged 45 to 54 grew roughly 20 percentage points faster than those of their counterparts aged 25 to 34. Differential changes in unionization, job tenure, industry of employment, and occupation explain about 40% of this difference for men and about 75% of this difference for women. In contrast, men and women aged 25 to 34 experienced faster wage growth than their counterparts aged 45 to 54 from 1998 to 2011. Changes in unionization, industry of employment, and occupation tended to favour young workers (relative to older ones) during that period and accounted for most of the difference in wage growth observed across age groups during that period. Over the entire 1981-to-2011 period, average wages of workers aged 25 to 34 grew by at least 15 percentage points less than those of workers aged 45 to 54;
- After growing from 1980 to 2000, the wage gap between university- and high-school-educated individuals decreased from 2000 to 2011, especially among workers under age 35. This decline was driven by more rapidly rising wages among the less-educated, a reversal of the trend of earlier decades. The narrowing of the gap was associated with a shift in labour demand towards industries, such as mining, oil and gas extraction, and construction, which are less intensive users of highly-educated workers. Nevertheless, highly-educated workers, on average, still earn more than their less-educated counterparts;
- Wage growth varied significantly across industries over the last 30 years. Most notably, the finance sector experienced much faster wage growth than other sectors during the 1981-to-1998 period. Most of this sector’s wage growth was related to changes in worker characteristics and occupations within this sector, as upskilling appeared to be taking place. About one-half of the differences in wage growth between finance and construction—the sector that experienced the largest decline in wages during that period—was attributable to the more rapid acquisition in the finance sector of attributes associated with higher wages;
- Movements in industry-level wages were quite different during the 1998-to-2011 period. Unlike in the 1981-to-1998 period, during which few industries posted robust wage growth, several industrial sectors experienced close to two-digit wage growth after 1998. Wages in the resource sector (mining and petroleum) grew the fastest, and virtually none of this growth was related to changes in worker or job characteristics. In contrast, the retail trade sector experienced weak wage growth. From 1981 to 2011, pay rates in this sector changed little;
- In comparison with the other dimensions mentioned above, wage growth varied little across broad occupational groups from 1981 to 1998. However, during the first decade of this century, average wage growth for managerial occupations outpaced that observed in other aggregate occupational groups by a substantial margin. About 40% of wage growth in managerial occupations between 1998 and 2011 was due to changes in attributes associated with higher wages. Even after such changes were accounted for, managers continued to register the highest wage growth. Furthermore, only about one-quarter of the difference in wage growth between managers and workers in processing/manufacturing/utilities was attributable to changes in worker or job characteristics over the period.
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