The Gender Wage Gap: A Comparison of Australia and Canada

Abstract

Using data from the 1989 Canadian Labour Market Activity Survey and, for Australia, the 1989-90 Income Distribution Survey, the authors investigate the reasons for the significantly lower gender wage gap in Australia than in Canada. Key similarities and differences between these two countries, the authors argue, make them a good basis for a "natural experiment" to investigate the effects of different labor market institutions. In particular, Australia has a stronger union movement and a greater degree of centralization in wage determination than Canada, and most of its workers are covered by legally binding minimum working conditions. The authors conclude that several differences between the countries in labor market structure--notably, a lower rate of return to education, a lower rate of return to labor market experience, and a lower level of wage inequality in Australia than in Canada--are largely responsible for the smaller gender wage gap in Australia.

JEL Classification: J16, J31