This paper examines the links between the unemployment rate gap and wage inequality in the United States and Canada. Survey data for displaced workers from the early 1980s are compared for the two countries to examine differences in wages obtained after displacement. We look at all workers and subgroups of the population and compare entire wage distributions between the countries. While we find a tighter wage-change distribution in Canada, our results do not indicate that this is primarily due to more generous unemployment insurance in Canada.
Unemployment insurance does, however, improve wage outcomes for the long-term unemployed in Canada.