Income Inequality and Redistribution in Canada: 1976 to 2004 - ARCHIVED

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.