Earnings Inequality Among Aboriginal Groups in Canada

Data from the 2006 master file of the Canadian census is used to estimate the earnings differentials between non-Aboriginal persons and various groups of Aboriginal persons both on-reserve and off-reserve and throughout the earnings distribution. Generalizations that emerge include: an earnings disadvantage prevails across all Aboriginal groups; it is larger the greater the degree of “Aboriginal identity” (and where discrimination is most likely); more than half of the gap is “explained” by Aboriginal persons having lower endowments of pay determining characteristics (especially the younger age of the Aboriginal workforce, their lower levels of education and their working in lower-paying occupations); these patterns tend to prevail throughout the earnings distribution; the relative importance of endowments tends to increase as one moves up the earnings distribution; reductions in the earnings gap over time are more prominent at the higher ends of the earnings distribution and increases at the bottom especially for the on-reserve population. Policy implications are discussed, with an emphasis on the role of education.