Revisiting wealth inequality
René Morissette and Xuelin Zhang
- After increasing between 1984 and 1999, the gap between families in the top and bottom 20% of the wealth distribution continued to widen between 1999 and 2005. The wealthiest 20% of families held 75% of total household wealth in 2005, compared with 73% in 1999 and 69% in 1984.
- Part of the increased wealth among families in the top 20% was fuelled by growth in home equity. In both 1999 and 2005, the vast majority of these families—at least 95%—owned a house. Among homeowners, the median value of the principal residence rose $75,000 between 1999 and 2005, reflecting the sharp increase in housing prices.
- While the median wealth of families overall rose 26% between 1984 and 2005, it fell substantially among those in which the major income recipient was aged 25 to 34. In 2005, these families had median wealth of $13,400 (in 2005 dollars), much lower than the $27,000 and $17,400 registered in 1984 and 1999 respectively.
- The decrease in wealth among young families occurred mainly because the cumulative earnings of young men—the sum they receive over several years—fell substantially between the 1970s and the 1990s. Over the 1994-to-2004 period, their cumulative earnings averaged roughly $267,000, much less than the $330,000 for the 1973-to-1983 period.
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The authors are with the Business and Labour Market Analysis Division. René Morissette can be reached at 613-951-3608, Xuelin Zhang at 613-951-4295 or both at email@example.com.
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