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The Evolution of Wealth Inequality in Canada, 1984-1999

Listed author(s):
  • Rene Morissette

    (Business & Labor Market Analysis, Statistics Canada)

  • Xuelin Zhang

    (Business & Labor Market Analysis, Statistics Canada)

  • Marie Drolet

    (Business & Labor Market Analysis, Statistics Canada)

Registered author(s):

    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 recent immigrants and young couples with children; 3) real median wealth and real average wealth rose much more among families whose major income recipient is a university graduate than among other families; 4) real median and average wealth fell among families 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) changes in permanent income do not explain a substantial portion of the growing gap between low-wealth and high-wealth families. 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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    Paper provided by EconWPA in its series Microeconomics with number 0401004.

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    Date of creation: 15 Jan 2004
    Handle: RePEc:wpa:wuwpmi:0401004
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    1. Francine D. Blau & John W. Graham, 1990. "Black-White Differences in Wealth and Asset Composition," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 321-339.
    2. 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, vol. 25(3), pages 237-259, September.
    3. Murphy, Brian B & Wolfson, Michael, 1998. "New Views on Inequality Trends in Canada and the United States," Analytical Studies Branch Research Paper Series 1998124e, Statistics Canada, Analytical Studies Branch.
    4. Edward N. Wolff, "undated". "Racial Wealth Disparities Is the Gap Closing?," Economics Public Policy Brief Archive ppb_66, Levy Economics Institute.
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