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Differences in Wage Distributions Between Canada and the United States: An Application of a Flexible Estimator of Distribution Functions in the Presence of Covariates

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  • Stephen G. Donald
  • David A. Green
  • Harry J. Paarsch
Abstract
We construct a tractable, flexible-functional-form estimator of cumulative distribution functions for non-negative random variables which admits large numbers of covariates. The estimator adopts and extends techniques from the spell-duration literature for estimating hazard functions to distribution functions for wages, earnings, and income. We apply these methods to investigate sources of wage inequality for full-time male workers between Canada and the United States, finding that the Canadian wage density has a thinner left tail because low-educated workers have higher pay and a thinner right tail because of a lower proportion of highly-educated workers. Unions appear to play a large role in these outcomes.

Suggested Citation

  • Stephen G. Donald & David A. Green & Harry J. Paarsch, 2000. "Differences in Wage Distributions Between Canada and the United States: An Application of a Flexible Estimator of Distribution Functions in the Presence of Covariates," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 609-633.
    • Handle: RePEc:oup:restud:v:67:y:2000:i:4:p:609-633.
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    File URL: http://hdl.handle.net/10.1111/1467-937X.00147
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