Conferences at Department of Economics, University of Toronto, RCEF 2012: Cities, Open Economies, and Public Policy

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Different Paths? Human Capital Prices, Wages and Inequality in Canada and the US

Audra Bowlus, Chris Robinson*

Last modified: 2012-06-27


    From 1980-2000 average wages in Canada fell increasingly behind wages in the United States. At the same time the rise in inequality in the United States was not matched by a similar increase in Canada. This paper examines the path of human capital prices for four different types of human capital associated with four observable education levels, allowing for selection and technological change in the production in human capital that can be different in the two countries using the methods developed in Bowlus and Robinson (2012). The estimated price series show divergent paths. It uses the estimated price series to decompose the relative changes in average wages in the two countries into price and quantity components to assess their relative contributions to the different paths for wages and inequality.