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Income Inequality and Redistribution in Canada: 1976 to 2004

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  • Heisz, Andrew
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    Abstract

    Using data from the 1976-to-1997 Survey of Consumer Finances and the 1993-to-2004 Survey of Labour and Income Dynamics, we examine developments in family income inequality, income polarization, relative low income, and income redistribution through the tax-transfer system. We conclude that family after-tax-income inequality was stable across the 1980s, but rose during the 1989-to-2004 period. Growth in family after-tax-income inequality can be due to an increase in family market-income inequality (pre-tax, pre-transfer), or to a reduction in income redistribution through the tax-transfer system. We conclude that the increase in inequality was associated with a rise in family market-income inequality. Redistribution was at least as high in 2004 as it was at earlier cyclical peaks, but it failed to keep up with rapid growth in family market-income inequality in the 1990s. We present income inequality, polarization, and low-income statistics for several well-known measures, and use data preparations identical to those used in the Luxembourg Income Study in order to facilitate international comparisons.

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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 2007298e.

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    Date of creation: 11 May 2007
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    Handle: RePEc:stc:stcp3e:2007298e

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    Keywords: Employment insurance; social assistance and other transfers; Income; pensions; spending and wealth; Labour; Low income and inequality; Wages; salaries and other earnings;

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    1. Osberg, L & Xu, K, 1997. "International Comparisons of Poverty Intensity : Index Decomposition and Bootstrap Inference," Department of Economics at Dalhousie University working papers archive, Dalhousie, Department of Economics 97-03, Dalhousie, Department of Economics.
    2. Jenkins, S., 1988. "The Measurement Of Economic Inequality," Papers, Australian National University - Department of Economics 170, Australian National University - Department of Economics.
    3. 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.
    4. Wolfson, Michael, 1986. "Stasis amid Change--Income Inequality in Canada, 1965-1983," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 32(4), pages 337-69, December.
    5. Picot, Garnett, 1998. "What is Happening to Earnings, Inequality and Youth Wages in the 1990s?," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 1998116e, Statistics Canada, Analytical Studies Branch.
    6. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 87(345), pages 71-80, March.
    7. Myles, John, 2000. "The Maturation of Canada's Retirement Income System: Income Levels, Income Inequality and Low Income Among the Elderly," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2000147e, Statistics Canada, Analytical Studies Branch.
    8. Wolfson, Michael C, 1997. "Divergent Inequalities: Theory and Empirical Results," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 43(4), pages 401-21, December.
    9. Green, David A. & Milligan, Kevin & Frenette, Marc, 2006. "Revisiting Recent Trends in Canadian After-Tax Income Inequality Using Census Data," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2006274e, Statistics Canada, Analytical Studies Branch.
    10. Picot, Garnett & Myles, John, 2005. "Income Inequality and Low Income in Canada: an International Perspective," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2005240e, Statistics Canada, Analytical Studies Branch.
    11. Picot, Garnett & Green, David A. & Frenette, Marc, 2004. "Rising Income Inequality in the 1990s: An Exploration of Three Data Sources," Analytical Studies Branch Research Paper Series, Statistics Canada, Analytical Studies Branch 2004219e, Statistics Canada, Analytical Studies Branch.
    12. Bracewell-Milnes, Barry, 1979. "Measurement of Tax Progressivity: A Comment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 89(355), pages 648-51, September.
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    Cited by:
    1. Lars Osberg, 2011. "Why Did Unemployment Disappear from Official Macro-Economic Policy Discourse in Canada?," New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, Centre for the Study of Living Standards, in: Fred Gorbet & Andrew Sharpe (ed.), New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, pages 127-162 Centre for the Study of Living Standards.
    2. Caminada, Koen & Goudswaard, Kees & Wang, Chen, 2012. "Disentangling income inequality and the redistributive effect of taxes and transfers in 20 LIS countries over time," MPRA Paper 42350, University Library of Munich, Germany.
    3. Bryant, Toba & Raphael, Dennis & Schrecker, Ted & Labonte, Ronald, 2011. "Canada: A land of missed opportunity for addressing the social determinants of health," Health Policy, Elsevier, Elsevier, vol. 101(1), pages 44-58, June.
    4. Osberg, Lars, 2013. "Instability implications of increasing inequality: Evidence from North America," Economic Modelling, Elsevier, Elsevier, vol. 35(C), pages 918-930.

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