Size, Structure, and Change: Exploring the Sources of Aboriginal Earnings Gaps in 1995 and 2005

I investigate the trends and sources of the Aboriginal/non-Aboriginal annual earnings gap and the on-reserve annual earnings penalty. Three sources of these gaps are considered: differences in weeks worked, weekly earnings due to characteristics, and returns. I find that earnings differences between non-Aboriginals and Métis have declined due to convergence in the number of weeks worked. The on-reserve weekly earnings penalty has increased, possibly due to the changing proportion off-reserve. My study also examines the importance of taxes and transfers in reducing the earnings gap. While they do not eliminate most inequities, measured taxes and transfers eliminate the on-reserve earnings penalty for women.