Changing Income Inequality and Immigration in Canada 1980-1995

While there is a general consensus that income inequality has increased in most developed countries over the last two decades, the analytical focus has been at the national scale. However, these increases in inequality have not been uniform across different segments of society, either in terms of social group or geographic region. In particular, the high levels of immigration to metropolitan Canada have contributed to growing inequality. Using micro-level data on household income from the 1981,1986,1991 and 1996 censuses, this paper identifies the role of immigration and its differential impact on metropolitan and non-metropolitan areas. The impacts accelerated during the first half of the 1990s when immigration remained high yet the economy slowed. The evidence suggests that the overall impact of immigration is a relatively short-run phenomenon as recent immigrants take time to adjust to the labour market. If recent immigrants are excluded, inequality is still increasing, but at a slower rate, especially in the largest metropolitan areas.