THE GROWTH OF FAMILY EARNINGS INEQUALITY IN CANADA, 1980-2005

In this study we document recent trends in family earnings inequality using data from the Canadian Census and provide insight into the various factors that drive changes in the family earnings distribution. Over the period 1980-95 we observe substantial increases in family earnings inequality. In contrast, we find that some decrease in inequality occurred over the period 1995-2005 although the earnings of the richest 1 percent of families increased substantially. We use semi-parametric decomposition methods to show that increases in the employment rates of men and women, increases in their educational attainment, and decreases in assortative mating tended to have equalizing effects on the family earnings distribution. We also show that increases in the returns to higher education and increases in the proportion of single individuals as well as lone-parent families drove increases in family earnings inequality.