J. Dinardo et T. Lemieux, DIVERGING MALE WAGE INEQUALITY IN THE UNITED-STATES AND CANADA, 1981-1988 - DO INSTITUTIONS EXPLAIN THE DIFFERENCE, Industrial & labor relations review, 50(4), 1997, pp. 629-651
The U.S. and Canadian economies have much in common, including similar
collective bargaining structures. During the period 1981-88, however,
although both countries witnessed a decline in the percentage of work
ers belonging to unions and an increase in hourly wage inequality, tho
se changes were much more pronounced in the United States than in Cana
da. Using data on men in Canada and the United States in 1981 and 1988
(from the Labour Force Survey and supplements to the Current Populati
on Survey), the authors study the effect of labor market institutions
on changes in wage inequality by computing simple counterfactuals such
as the distribution of wages that would prevail if all workers were p
aid according to the observed nonunion wage schedule. Their results su
ggest that much more severe declines in the unionization rate in the U
nited States than in Canada account for two-thirds of the differential
growth in wage inequality between the two countries.