Wednesday, 12 December 2012

Income Inequality in Canada

Recently, TD Bank issued a confusing report that either stated that income inequality in Canada is a problem or is not a problem.

From the National Post:

"TD Bank issued a new report on Tuesday, Income and Income Inequality: A Tale of Two Countries, that either said income inequality in Canada is not as big a deal as it’s made out to be, or that it’s significantly worse than the bank expected."

So which is it? When looking at income inequality, I like to look at long data sets.

If we look at the top 1% income earners in Canada, we see more inequality. The top 1% income share is now at a value comparable to what it was in the 1930s.

 The Pareto-Lorenz coefficient for Canada is now at a value similar to what it was in the 1930s. For those not specializing in income inequality, higher values of the coefficient represent more income equality, Low coefficient values represent less income equality. Notice, that of the countries shown in the chart, income inequality has fluctuated the least in Germany.
 Based on these two charts, income inequality in Canada has been getting worse since the late 1970s.

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