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Consumption inequality in Canada, 1997 to 2009

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  • Sam Norris
  • Krishna Pendakur

Abstract

We assess the evolution of consumption inequality in Canada over the years 1997 to 2009. We correct the imputation of shelter consumption for homeowners to allow for unobserved differences in housing quality correlated with selection into rental tenure, and we account for measurement error in this imputation. Using the annual Survey of Household Spending for years 1997 to 2009, we find that household‐level consumption inequality measured by the Gini coefficient increased from 0.251 to 0.275 over 1997 to 2006. Between 2006 and 2007, consumption inequality may have decreased, and over 2007 to 2009, consumption inequality was flat. Over the entire period of 1997 to 2009, consumption inequality increased moderately. The Gini coefficient for individual‐level consumption inequality followed a similar pattern, though the changes were smaller in magnitude. We also explore a possible correction for tail non‐response bias in inequality measurement and find that the increase in measured consumption inequality is robust to this correction. Inégalité de la consommation au Canada, 1997–2009. Les auteurs jaugent l'évolution de l'inégalité de la consommation au Canada entre 1997 et 2009. Ils corrigent les coûts imputés pour l'habitation pour ceux qui possèdent leur maison afin de mieux apprécier les différences mal mesurées dans la qualité du logis co‐reliées avec le choix du régime d'habitation, et on explique cette erreur de mesure. À l'aide des enquêtes sur les dépenses des ménages (1997–2009), on découvre que l'inégalité de la consommation au niveau des ménages, telle que mesurée par le coefficient de Gini, s'est accrue de 0.251 à 9.275 entre 1997 et 2006, et a chuté à 0.264 en 2009. Le coefficient de Gini pour l'inégalité entre individus va croître de 0.199 en 1997 à 0.216 en 2006, avant de retomber à 0.207 en 2009. On observe donc le même pattern pour les ménages et les individus, mais, dans le cas des ménages, le déclin après 2006 a été suffisant pour effacer tout l'accroissement dans la période avant 2006. Les auteurs explorent aussi une correction possible pour les non‐réponses dans les extrémités de la distribution sur la mesure de l'inégalité de consommation, et concluent que l'accroissement dans la mesure de l'inégalité de consommation est robuste.

Suggested Citation

  • Sam Norris & Krishna Pendakur, 2015. "Consumption inequality in Canada, 1997 to 2009," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 773-792, May.
  • Handle: RePEc:wly:canjec:v:48:y:2015:i:2:p:773-792
    DOI: 10.1111/caje.12143
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    1. Jonathan D. Fisher & David S. Johnson & Joseph T. Marchand & Timothy M. Smeeding & Barbara Boyle Torrey, 2007. "No Place Like Home: Older Adults and Their Housing," The Journals of Gerontology: Series B, The Gerontological Society of America, vol. 62(2), pages 120-128.
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    4. Sam Norris & Krishna Pendakur, 2013. "Imputing rent in consumption measures, with an application to consumption poverty in Canada, 1997–2009," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(4), pages 1537-1570, November.
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    9. Nicole Fortin & David A. Green & Thomas Lemieux & Kevin Milligan & W. Craig Riddell, 2012. "Canadian Inequality: Recent Developments and Policy Options," Canadian Public Policy, University of Toronto Press, vol. 38(2), pages 121-145, June.
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    Cited by:

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    4. Charles M. Beach, 2016. "Changing income inequality: A distributional paradigm for Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1229-1292, November.
    5. He, Yuan & Li, Ke & Wang, Yipan, 2022. "Crossing the digital divide: The impact of the digital economy on elderly individuals’ consumption upgrade in China," Technology in Society, Elsevier, vol. 71(C).
    6. Xia, Qingjie & Li, Shi & Song, Lina, 2017. "Urban Consumption Inequality in China, 1995–2013," IZA Discussion Papers 11150, Institute of Labor Economics (IZA).
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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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