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World Income Inequality

Income gap between the rich and poor increasing faster in Canada than in the United States.  Website | Media release

Is the world becoming more unequal? [ September 2011]

Key Messages

  • Of total world income, 42 per cent goes to those who make up the richest 10 per cent of the world’s population, while just 1 per cent goes to those who make up the poorest 10 per cent. 
  • Income inequality among countries in the world rose sharply between the 1980s and the mid-1990s, before levelling off and then falling after 2000. 
  • Countries with very high inequality are clustered in South America and southern Africa. Countries with low inequality are mostly in Europe. Canada and the U.S. have medium income inequality. 
  • The increase in income inequality has been greater in Canada than in the U.S. since the mid-1990s. 

News Release 12-33 

Income Gap Between The Rich And Poor Increasing Faster In Canada Than In The United States

Ottawa, September 13, 2011—Since the mid-1990s, income inequality has been rising more rapidly in Canada than in the United States, according to The Conference Board of Canada’s How Canada Performs analysis of world income inequality.

“Canada had the fourth largest increase in income inequality among its peers,” said Anne Golden, President and CEO of the Conference Board. “Even though the U.S. currently has the largest rich-poor income gap among these countries, the gap in Canada has been rising at a faster rate.”

“As we highlighted in our analysis of Canadian income inequality in July, high inequality both raises a moral question about fairness and can contribute to social tensions. In Canada, the gap between the rich and poor has widened over two decades, especially compared to our peer countries.”   

How Canada Performs 2011—Income Inequality in Canada

Hot Topic: Canadian Income Inequality

Is Canada becoming more unequal? 

Key Messages

  • Income inequality in Canada has increased over the past 20 years. 
  • The richest group of Canadians increased its share of total national income between 1993 and 2008, while the poorest group lost share. Middle-income Canadians also lost share. 
  • Although the gap between the rich and poor widened, Canadians in the poorest income group still saw their income levels rise, albeit minimally.

Who are the at-risk groups for low income?

Low income is more prevalent in certain at-risk groups. The recent House of Commons report on poverty identified 10 groups that were most at risk of experiencing low income: children, lone-parent families (particularly female lone-parent families), women, unattached individuals, seniors, Aboriginal people, people with disabilities, recent immigrants, visible minorities, and low-wage workers.

After 20 years of dramatic reductions, Canada’s elderly poverty rate has been rising since the mid-1990s, a worrisome trend. Among the elderly, the biggest jump occurred in the group of elderly women. Between 2006 and 2009, nearly 128,000 more seniors were said to be living in low income. Of that amount, 70 per cent were women. 

If the rich are getting richer, are the poor getting poorer?

Not necessarily. It is possible for the relative gap between the rich and poor to widen, even while all Canadians see their absolute income levels rise. This is precisely what has happened in Canada. The average income level of the poorest group of people in Canada—after taxes and transfers and after adjusting for inflation—rose over the time period for which we have data—but only marginally. It rose from $12,400 in 1976 to $14,500 in 2009.

The poor did get notably poorer in two periods. The recession in the early 1980s caused the income level of the poorest group to fall from $13,500 in 1981 to $12,300 in 1983. The economy bounced back quickly from that recession, however, and income levels recovered. This was not the case for the 1991–93 recession, the effects of which lingered for most of the decade. Between 1989 and 1998, real average incomes among the poorest group fell by an average of 2.2 per cent per year. This decline was due largely to recession effects on earnings, but also to the fact that average transfers from governments fell over that period.

While the poor did not get poorer according to absolute real income levels, they did get poorer in a relative sense. The gap between the real average income of the richest group (fifth quintile) of Canadians and the poorest group (first quintile) grew from $92,300 in 1976 to $117,500 in 2009. Thus, while the poor are minimally better off in an absolute sense, they are significantly worse off in a relative sense.


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