International trade and wage inequality in Canada

We investigate the impact of international trade on wages and on wage inequality across industries and regions in Canada. An employer–employee dataset is developed combining individual worker characteristics from the 20% sample of the 2001 Census of Population and synthetic establishments from the 1999 Annual Survey of Manufactures. Results from wage regression models show that import competition from low-income countries has a significant impact on wage inequality in Canada, pushing down the wages of less-educated workers relative to those of highly educated workers. The negative effect of import competition on the wages of less-skilled workers is shown to be more pronounced in Quebec and in the Prairie provinces, as well as in labor-intensive and product-differentiated industries.

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