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Journal of Economic Geography Advance Access published online on April 22, 2009
Journal of Economic Geography, doi:10.1093/jeg/lbp016
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© The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

International trade and wage inequality in Canada

Sébastien Breau* and David L. Rigby{dagger}

*Department of Geography, McGill University, 805 Sherbrooke Street West, Montréal, Québec, H3A 2K6, Canada. email <sebastien.breau@mcgill.ca>
{dagger}Department of Geography, UCLA, 1255 Bunche Hall, Los Angeles, California, 90095, USA. email <rigby@geog.ucla.edu>

JEL classifications: F16, J31, R23, D63

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 Québec and in the Prairie provinces, as well as in labor-intensive and product-differentiated industries.

Keywords: wage inequality, import competition, micro-data, Canada
Date submitted: 21 October 2008     Date accepted: 24 March 2009


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