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Consumption Inequality in Canada, 1997 to 2009

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  • Norris, Sam
  • Pendakur, Krishna

Abstract

We assess the evolution of consumption inequality in Canada over the years 1997 to 2009. We correct the imputation of shelter consumption for owner-occupiers 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 Surveys of Household Spending 1997-2009, we find that household-level consumption inequality measured by the Gini coefficient has increased from 0.251 to 0.275 over 1997 to 2006, and then declined to 0.264 by 2009. Individual level inequality similarly increased from 0.199 in 1997 to 0.216 in 2006, but fell to 0.207 in 2009. Income inequality followed a similar hump-shaped pattern, but the post-2006 decline was large enough to entirely wipe out pre-2006 gains. 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.

Suggested Citation

  • Norris, Sam & Pendakur, Krishna, 2014. "Consumption Inequality in Canada, 1997 to 2009," CLSSRN working papers clsrn_admin-2014-29, Vancouver School of Economics, revised 16 Jun 2014.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2014-29
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    File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%20138%20-%20Norris%20and%20Pendakur.pdf
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    References listed on IDEAS

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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," Journals of Gerontology: Series B, Gerontological Society of America, vol. 62(2), pages 120-128.
    2. Matthew Brzozowski & Thomas F. Crossley, 2011. "Viewpoint: Measuring the well-being of the poor with income or consumption: a Canadian perspective," Canadian Journal of Economics, Canadian Economics Association, vol. 44(1), pages 88-106, February.
    3. 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.
    4. 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.
    5. Erich Battistin & Richard Blundell & Arthur Lewbel, 2009. "Why Is Consumption More Log Normal than Income? Gibrat's Law Revisited," Journal of Political Economy, University of Chicago Press, vol. 117(6), pages 1140-1154, December.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    7. Arthur Lewbel & Krishna Pendakur, 2009. "Tricks with Hicks: The EASI Demand System," American Economic Review, American Economic Association, vol. 99(3), pages 827-863, June.
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    Cited by:

    1. Xia, Qingjie & Li, Shi & Song, Lina, 2017. "Urban Consumption Inequality in China, 1995–2013," IZA Discussion Papers 11150, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Consumption; Inequality; Canada;

    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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