More Evidence on the Effect of Higher Unemployment on the Canadian Size Distribution of Income

This paper provides evidence that cyclical unemployment is associated with increased income inequality in Canada. The empirical results reinforce the recent findings of Erksoy (1981-1987). Erksoy used a dynamic micro-simulation to model the period from 1981 to 1987. In contrast to his work, my paper takes a macroeconomic perspective and uses an income share model. I examine the period from 1981 to 1992 using data from the "Survey of Consumer Finances." It is striking that two such different approaches reach the same conclusion.