Older Workers and the Diminishing Return of Employment: Changes in Age-Based Income Inequality in Canada, 1996–2011

Abstract

This article assesses age-based income inequality among employed Canadians using Canadian Census data over a 15-year period from 1996 to 2011. We show that income inequality has risen for groups of older workers since 1996 and that incomes have polarized based on level of education and occupation. More specifically, we find that wages have stagnated for those with lower levels of education and those not employed in management or upper-level professional occupations. Few Canadians experienced noticeable income gains (and this is more pronounced for men than for women) suggesting that many older workers have fallen into relative economic hardship since 1996. We argue that this is because, at least in part, Canadian policies have failed to adequately consider the dilemma that older workers face when they lose their jobs in an economy that requires more highly skilled workers now than was true in the past. We argue that increasing the pension eligibility age for Old Age Security (OAS) may put older Canadian workers at heightened risk of experiencing income insecurity. Hence, changes to OAS must be linked to new labor market and education policy so that older workers can gain the skills they need to remain in and compete for well-paying jobs later life.

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