Inequality

Canadian Income Inequality

Is Canada becoming more unequal?

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Key Messages

Income inequality in Canada has increased over the past 20 years.

The richest group of Canadians increased its share of total national income between 1993 and 2008, while the poorest group lost share. Middle-income Canadians also lost share.

Although the gap between the rich and poor widened, Canadians in the poorest income group still saw their income levels rise, albeit minimally.

What is income inequality and why does it matter?

Income inequality is the extent to which income is distributed unevenly in a country. It’s an important companion statistic to income per capita, which measures how much income a country has, but not how this income is distributed. Income inequality within a country is often masked by the national average.

High inequality raises two questions. First, what is the impact on the economic well-being of a country? The answer is that high inequality can diminish economic growth if it means that the country is not fully using the skills and capabilities of all its citizens or if it undermines social cohesion, leading to increased social tensions. Second, high inequality raises a moral question about fairness and social justice.

There is, however, no consensus on when income inequality reaches this tipping point.

Is Canada becoming more unequal?

Income inequality in Canada has increased over the past 20 years.

The most commonly used measure of income inequality is the Gini index, which is measured on a scale of 0 to 1. Named after the Italian statistician Corrado Gini, the Gini index calculates the extent to which the distribution of income among individuals within a country deviates from an exactly equal distribution:

a Gini index of 0 represents exact equality—that is, every person in the society has the same amount of income

a Gini index of 1 represents total inequality—that is, one person has all the income and the rest of the society...