Wages track productivity in Canada

More or less.  Here are the graphs.  The implications?

…consider the hypothesis that US real wages are being held
back by competition from low-wage countries such as China.  This is a
plausible story – we’d expect wages to converge eventually – but it
doesn’t square with the Canadian experience.  If anything, we’d expect
the effect to be even stronger in Canada, what with the 40%
appreciation of the CAD against the yuan since 2002.

The pointer is from New Economist blog.  And no, the difference is not there because the Canadians are caring people or because they did not elect that nasty Mr. Bush.  Mexican immigrants won’t explain stagnant wages along the middle end of the distribution.  One commentator has an intriguing suggestion:

Positive net employment change in Canada is most concentrated in the
high-paying energy sector in Alberta.  A great proportion of the jobs
being created demand high-skilled workers.  I wonder how much of the discrepancy in median incomes between Canada
and the US can be explained by the increase in job creation in Canada’s
energy sector relative to the type of job creation occurring in the US. 
Entry-level workers in BC and Alberta are getting paid big bucks.

Might the United States have experienced sectoral shifts which are unfavorable for median wages but favorable for wages at the upper ends of the distribution?  Another factor is that rising health care costs in the U.S. are absorbed into benefit costs but in Canada these costs are socialized to greater degree.  In any case economists have yet to get to the bottom of this mystery…


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