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The Evolution of Wealth Inequality in Canada, 1984-1999

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  • Drolet, Marie
  • Zhang, Xuelin
  • Morissette, Rene
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    Abstract

    Using data from the Assets and Debts Survey of 1984 and the Survey of Financial Security of 1999, we document the evolution of wealth inequality in Canada between 1984 and 1999. Our main findings are as follows: 1) wealth inequality has increased between 1984 and 1999, 2) the growth in wealth inequality has been associated with substantial declines in real average and median wealth for young couples with children and recent immigrants, 3) real median wealth and real average wealth rose much more among family units whose major income recipient is a university graduate than among other family units, 4) real median and average wealth fell among family units whose major income recipient is aged 25-34 and increased among those whose major income recipient is aged 55 and over, 5) the aging of the Canadian population over the 1984-1999 period has tended to reduce wealth inequality, 6) diverging changes in permanent income do not explain a substantial portion of the growing gap between low-wealth and high-wealth family units. Factors that may have contributed to rising wealth inequality - which cannot be quantified with existing data sets - include differences in the growth of inheritances, inter vivos transfers, rates of return on savings and number of years worked full-time. In particular, rates of return on savings may have increased more for wealthy family units than for their poorer counterparts as a result of the booming stock market during the 1990s.

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    Bibliographic Info

    Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2002187e.

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    Date of creation: 22 Feb 2002
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    Handle: RePEc:stc:stcp3e:2002187e

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    Keywords: Household assets; debts and wealth; Household; family and personal income; Income; pensions; spending and wealth; Low income and inequality;

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    1. Blau, Francine D & Graham, John W, 1990. "Black-White Differences in Wealth and Asset Composition," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 105(2), pages 321-39, May.
    2. Maury Gittleman & Edward N. Wolff, 2000. "Racial Wealth Disparities: Is the Gap Closing?," Economics Working Paper Archive, Levy Economics Institute wp_311, Levy Economics Institute.
    3. Joseph G. Altonji & Ulrich Doraszelski, 2001. "The Role of Permanent Income and Demographics in Black/White Differences in Wealth," NBER Working Papers 8473, National Bureau of Economic Research, Inc.
    4. Menchik, Paul L & Jianakoplos, Nancy Ammon, 1997. "Black-White Wealth Inequality: Is Inheritance the Reason?," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 35(2), pages 428-42, April.
    5. Murphy, Brian & Wolfson, Michael, 1998. "New Views on Inequality Trends in Canada and the United States," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1998124e, Statistics Canada, Analytical Studies Branch.
    6. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February.
    7. Davies, J B, 1979. "On the Size Distribution of Wealth in Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 25(3), pages 237-59, September.
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    Cited by:
    1. Andrea Brandolini & Luigi Cannari & Giovanni D'Alessio & Ivan Faiella, 2004. "Household Wealth Distribution in Italy in the 1990s," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 530, Bank of Italy, Economic Research and International Relations Area.
    2. Matthew Brzozowski & Martin Gervais & Paul Klein & Michio Suzuki, 2010. "Consumption, Income, and Wealth Inequality in Canada," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(1), pages 52-75, January.
    3. Haan, Michael, 2005. "The Decline of the Immigrant Homeownership Advantage: Life-cycle, Declining Fortunes and Changing Housing Careers in Montreal, Toronto and Vancouver, 1981-2001," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2005238e, Statistics Canada, Analytical Studies Branch.

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