Wednesday, July 13, 2011

Canadian Income Inequality on the Rise

A recent report from the Conference Board of Canada has found that income inequality in Canada has increased over the last 20 years (see the video on the page). The general argument is that increased trade in commodities boosted the Canadian economy to the primary benefit of those in the upper quintiles of the income distribution.

While not as skewed as the income distribution in the U.S., Canada's Gini Coefficient is now at 0.32 (realtive to the U.S. at 0.38). As reported by the Wall Street Journal,

On an inflation-adjusted basis, the average Canadian income has climbed 17% to C$59,700 (US$61,788) over a 33-year period to 2009. Yet, the board noted median income — or the level that divides Canadian income earners into two equal parts and is said to be a better indicator on how the majority of households are doing — rose just 5.5% in the same time period.

Yet, inequality is not the be all and end all: while incomes for everyone may rise, inequality can rise if the rate of increase varies across income group. That said (again from the WSJ):

It said the average income level of the poorest group of Canadians — excluding government benefits, after-tax and adjusted for inflation — rose marginally from $12,400 in 1976 to $14,500 in 2009. As a result, the gap between the real average income of the top quintile of Canadian earners and the poorest group, or the lowest quintile, grew from C$92,300 in 1976 to C$117,500 in 2009.

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