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October 2006
Vol. 7, no. 10

Perspectives on Labour and Income

Earnings instability
René Morissette and Yuri Ostrovsky

  • Earnings instability varies considerably and is much higher among families in the bottom third of the employment income scale than among those in the top third.
  • Government transfers provide a substantial offset for income losses and thus reduce income volatility. The progressive nature of income taxes further reduces volatility by restricting both income gains and income losses.
  • Social assistance appears to be the single most important factor in reducing income instability among lone mothers in all age groups.
  • Among unattached individuals with positive earnings in all six years of a considered period, Employment Insurance was far more important than social assistance in reducing instability.

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The authors are with the Business and Labour Market Analysis Division. René Morissette can be reached at 613-951-3608, Yuri Ostrovsky at 613-951-4229 or both at

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