social inequality in canada essay

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6 Social Inequality in Canada

Learning Objectives

6.1. What Is Social Inequality?

• Break the concept of social inequality into its component parts: social differentiation, social stratification, and social distributions of wealth, income, power, and status.
• Define the difference between equality of opportunity and equality of condition.
• Distinguish between caste and class systems.
• Distinguish between class and status.
• Identify the structural basis for the different classes that exist in capitalist societies.

6.2. Social Inequality and Mobility in Canada

• Define the difference between relative and absolute poverty.
• Describe the current trend of increasing inequalities of wealth and income in Canada.
• Distinguish the the differences between Marx’s and Weber’s definitions of social class and explain why they are significant.
• Characterize the social conditions of the owning class, the middle class, and the traditional working class in Canada.
• Apply the research on social mobility to the question of whether Canada is a meritocracy.
• Recognize cultural markers that are used to display class identity.

6.3. Global Stratification and Inequality

• Define global inequality.
• Describe different sociological models for understanding global inequality.
• Understand how sociological studies identify worldwide inequalities.

Introduction to Social Inequality in Canada

When he died in 2008, Ted Rogers Jr., then CEO of Rogers Communications, was the fifth-wealthiest individual in Canada, holding assets worth $5.7 billion. In his autobiography (2008) he credited his success to a willingness to take risks, work hard, bend the rules, be on the constant look-out for opportunities, and be dedicated to building the business. He saw himself as a self-made billionaire who started from scratch, seized opportunities, and created a business through his own initiative.

The story of Ted Rogers is not exactly rags-to-riches, however. His grandfather, Albert Rogers, was a director of Imperial Oil (Esso) and his father, Ted Sr., became wealthy when he invented an alternating current vacuum tube for radios in 1925. Ted Rogers Sr. went on to manufacturing radios, owning a radio station, and acquiring a TV broadcasting licence.

However, Ted Sr. died when Ted Jr. was five years old, and the family businesses were sold. The family was still wealthy enough to send him to Upper Canada College, the famous private school that educates children from some of Canada’s wealthiest families. Ted seized the opportunity at Upper Canada to make money as a bookie, taking bets on horse racing from the other students. Then he attended Osgoode Hall Law School, where reportedly his secretary went to classes and took notes for him. He bought an early FM radio station when he was still in university and started in cable TV in the mid-1960s. By the time of his death, Rogers Communications was worth $25billion.

At the other end of the opportunity spectrum are the Indigenous gang members in the Saskatchewan Correctional (CBC, 2010). CBC noted that 85 percent of the inmates in the prison were of Indigenous descent. The statistical profile of Indigenous Saskatchewan youth is grim, with high levels of school attrition,domesticabuse,drugdependencies,andchildpoverty.

In some ways the Indigenous inmates interviewed were like Ted Rogers: they were willing to seize opportunities, take risks, bend rules, and apply themselves to their vocations. They too aspired to get the money that would give them the freedom to make their own lives. However, as one of the inmates put it, “the only job I ever had was selling drugs” (CBC, 2010). The consequence was falling into a lifestyle that led to joining a gang, being kicked out of school, developing issues with addiction, and eventually getting arrested and incarcerated. Unlike Ted Rogers, however, the inmate added, “I didn’t grow up with the best life” (CBC, 2010).

How do we make sense of the different stories? Canada is supposed to be a country where individuals can work hard to get ahead. It is an “open” society. There are no formal class, gender, racial, ethnic, geographical, or other boundaries that prevent people from rising to the top. People are free to make choices. But does this explain the difference in life chances that divide the Indigenous youth from the Rogers family? What determines a person’s social standing? And how does social standing expand or limit a person’s choices?

6.1. What Is Social Inequality?

Sociologists use the term social inequality to describe the unequal distribution of resources, rewards and positions in a society. When a social category like class, occupation, gender, or race puts people in a position from which they can claim a greater share of resources or services, this becomes the basis of social inequality.

The term social stratification refers to an institutionalized system of social inequality. In social stratification, the divisions and relationships of social inequality have solidified into a system that determines who gets what, when, and why.

The distinct horizontal layers found in rock, called “strata,” help visualize stratification of social structure. Society’s layers are made of people, and society’s resources are distributed unevenly throughout the layers. The people who have more resources represent the top layer of social stratification. Other groups, with progressively fewer and fewer resources, represent the lower layers of our society. Social stratification assigns people to socioeconomic strata based on factors like wealth, income, race, education, and power. Sociologists ask how systems of stratification are formed. What is the basis of systematic social inequality in society?

Many Canadians believe in equality of opportunity and assume everyone has an equal chance at success. Equality of opportunity exists when people have the same chance to pursue economic or social rewards. This is often seen as a function of equal access to education, meritocracy (where individual merit determines social standing), and formal or informal measures to eliminate social discrimination.  Sociologists debate whether Canadians have equality of opportunity.

Ted Rogers’ story illustrates the belief in equality of opportunity. In his personal narrative, hard work and talent — not inherent privilege, birthright, prejudicial treatment, or societal values— determined his social rank. This emphasis on self-effort is based on the belief that people individually control their own social standing, a key piece in the idea of equality of opportunity.

Most people connect inequalities of wealth, status, and power to the individual characteristics of those who succeed or fail. The story of the Indigenous gang members, although it is also a story of personal choices, disproves that belief. The type of choices available to the Indigenous gang members are very different than those available to the Rogers family.

Social inequality is not about individual inequalities, but about systematic inequalities based on group membership, class, gender, ethnicity, and other variables that structure access to rewards and status. Sociologists examine the structural conditions of social inequality. There are differences in individuals’ abilities and talents. The larger question, however, is how inequality becomes systematically structured in economic, social, and political life. Who gets the opportunities to develop their abilities and talents, and who does not? Where does “ability” or “talent” come from? Because we live in a society that emphasizes the individual — individual effort, individual morality, individual choice, individual responsibility, individual talent, etc. — it is often difficult to see how life chances are socially structured.

In most modern societies, stratification is defined by differences in

• wealth , the net value of money and assets a person has, and
• income , a person’s wages,salary,orinvestmentdividends.
• power (how many people a person must take orders from versus how many people a person can give orders to) and
• status (the degree of honour or prestige one has in the eyes of others).

These four factors merge to define individuals’ social standing within a hierarchy. Cultural attitudes and beliefs support and perpetuate social inequalities.

Systems of Stratification

Sociologists distinguish between two types of systems of stratification.

• Closed systems accommodate little change in social position. They do not allow people to shift levels and do not permit social relations between levels.
• Open systems, based on achievement, allow movement and interaction between layers and classes.

Different systems reflect, emphasize, and foster certain cultural values, and shape individual beliefs. This difference in stratification systems can be examined by the comparison between class systems and caste systems.

The Caste System

Caste systems are closed stratification systems in which people can do little or nothing to change their social standing. A caste system is one in which people are born into their social standing and remain in it their whole lives. It is based on fixed or rigid status distinctions, rather than economic factors. Status is defined by the level of honour or prestige received by membership in a group.

Sociologists distinguish between ascribed status — a status received by being born into a category or group (hereditary position, gender, race, etc.) —and achieved status — a status received through individual effort or merits (occupation, educational level, moral character, etc.). Caste systems are based on a hierarchy of ascribed statuses, based on being born into fixed caste groups.

The caste system existed in India from 4,000 years ago until the 20th century. In the Hindu caste tradition, people were also expected to work in the occupation of their caste and marry according to their caste. Accepting this social standing was considered a moral duty. Cultural values and economic restrictions reinforced the system. Caste systems promote beliefs in fate, destiny, and the will of a higher power, rather than valuing individual freedom. A caste society socialized individuals to accept his or her social standing.

Although the caste system in India has been officially dismantled, its residual presence in Indian society is deeply embedded. In rural areas, aspects of the tradition are more likely to remain, while urban centres show less evidence of this past. In India’s larger cities, people now have more opportunities to choose their own career paths and marriage partners. As a global centre of employment, corporations have introduced merit-based hiring and employment to the nation.

The Class System

A class system is based on both social factors and individual achievement. It is at least a partially open system. A class consists of a set of people who have the same relationship to the means of production, that is, to the ways used to produce the goods and services needed for survival: tools, technologies, resources, land, workplaces, etc. In Karl Marx’s analysis, class systems form around the institution of private property, dividing those who own or control productive property from those who do not, who survive through their labour.

Social class has both a strictly material quality relating to these definitions of individuals’ positions within a given economic system, and a social quality relating to the formation of common class interests, political divisions, life styles and consumption patterns, and “life chances” (Weber 1969). Whether defined by material or social characteristics however, the main social outcome of the class structure is inequality in society.

In capitalism, the principle class division is between

• the capitalist class who live from the proceeds of owning or controlling property (capital assets like factories and machinery, or capital itself in the form of investments, stocks, and bonds) and
• the working class who live from selling their labour to the capitalists for a wage.

Marx used terms like bourgeoisie, proletariat and lumpenproletariat (the sub-proletariat).

The bourgeoisie include shopkeepers, farmers, and contractors who own some property and perhaps employ a few workers but still rely on their own labour to survive. The proletariat are the poorer workers. The lumpenproletariat are the chronically unemployed or irregularly employed who are in and out of the workforce. They are what Marx referred to as the “reserve army of labour,” a pool of potential labourers who are not always needed in the economy.

In a class system, social inequality is structural , meaning that it is “built in” to the organization of the economy. The relationship to the means of production means whether someone is an owner or not. The relationship to the means of production creates a pattern of social relationships that exist outside of individuals’ choice. The bourgeoisie is driven to accumulate capital and increase profit. They achieve this in a competitive marketplace by reducing the cost of production by lowering the cost of labour (by reducing wages, moving production to lower wage areas, or replacing workers with labour-saving technologies). This contradicts the interests of the proletariat who want to establish a good standard of living by maintaining the level of their wages and the level of employment in society.

The class interests clash and define a pattern of management-labour conflict and political differences.

However, unlike caste systems, class systems are open. People are at least formally free to gain a different level of education or employment than their parents. They can move up and down the stratification system. They can also socialize with and marry members of other classes, moving from one class to another. Individuals can move up and down the class hierarchy, even while the class categories and the class hierarchy remain stable.

In a class system, occupation is not fixed at birth. Though family and other social models guide a person toward a career, personal choice plays a role. For example, Ted Rogers Jr. chose a career in media like his father but managed to move from a position of relative wealth and privilege to be the fifth wealthiest bourgeois in the country.

Standard of Living

In the last century, Canada has seen a steady rise in standard of living, wealth available to acquire material necessities and comforts. The standard of living is based on factors such as income, employment, class, poverty rates, and affordability of housing. Because standard of living is closely related to quality of life, it can represent factors such as the ability to afford a home, own a car, and take vacations. Access to a standard of living that enables equal participation in community life  is not equally distributed, however.

Canadians may not have to live in absolute poverty—“a severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information” (United Nations, 1995)—to be marginalized and socially excluded. Relative poverty refers to the minimum amount of income or resources needed to be able to participate in the “ordinary living patterns, customs, and activities” of a society (Townsend, 1979).

In Canada, a small portion of the population has the highest standard of living. Statistics Canada data showed that 10 percent of the population held 58 percent of our nation’s wealth in 2005 (Osberg, 2008). In 2007, the richest 1 percent took 13.8 percent of the total income earned by Canadians (Yalnizyan, 2010). In 2010, the median income earner in the top 1 percent earned 10 times more than the median income earner of the other 99 percent (Statistics Canada, 2013).

Wealthy people receive the most schooling, have better health, and consume the most goods and services. Wealthy people also have decision-making power. One aspect of their decision-making power comes from their positions as owners corporations and banks. They can grant themselves salary raises and bonuses. By 2010, only two years into the economic crisis of 2008, the pay of CEOs at Canada’s top 100 corporations jumped by 13 percent (McFarland, 2011), while negotiated wage increases in 2010 amounted to only 1.8 percent (HRSDC, 2010).

Many people think of Canada as a middle-class society. They think a few people are rich, a few are poor, and most are well off, existing in the middle of the social strata. But as the data above indicate, the distribution of wealth is not even. Millions of women and men struggle to pay rent, buy food, and find work that pays a living wage. Moreover, the share of the total income claimed by those in the middle-income ranges has been shrinking since the early 1980s, while the share taken by the wealthiest has been growing (Osberg, 2008).

For several decades, between 1946 and 1981, changes in income inequality were small even though the Canadian economy was massively transformed:

• the economy moved from an agricultural base to an industrial base;
• the population urbanized and doubled in size;
• the overall production of wealth measured by gross domestic product (GDP ) increased by 4.5%; and per capita output increased by 227% (Osberg, 2008).

Economic inequality not change during this period of massive transformation.

From 1981 until the present, during another period of rapid and extensive economic change, the overall production of wealth continued to expand. However, economic inequality increased dramatically. What happened?

Between 1946 and 1981 real wages increased in pace with economic growth. But since 1981 only the top 20% of families have seen increase in real income, and the very wealthy have seen huge increases. The taxable income of the top 1% of families increased by 80% between 1982 and 2004 (Obsberg, 2008).

Neoliberal policies of reduced state spending and increased tax cuts have been major differences between these two eras. The neoliberal theory that benefits of tax cuts to the rich would “trickle down” to the middle class and the poor has proven false. The biggest losers in neoliberal policy are the very poor. As Osberg notes, it was not until the 1980s and 1990s that the homeless—those forced to beg in the streets and those dependent on food banks—began to appear in Canada in significant numbers (2008).

The idea that equality of opportunity—a meritocracy leads to social mobility, movement from one social position to another —is debatable. Degrees of social inequality also vary significantly between regions.

Making Connections: Sociological Research

Measuring levels of poverty.

Statistics Canada produces two relative measures of poverty: the low income measure (LIM) and the low income cut-off (LICO) measure. Human Resources and Skills Development Canada has developed an absolute measure: the market basket measure (MBM).

Low income measure: The LIM is defined as half the median family income. A person whose income is below that level is said to be in low income. The LIM is adjusted for family size.

Low income cut-off: The LICO is the income level below which a family would devote at least 20 percentage points more of their income to food, clothing, and shelter than an average family would. People are said to be in the low-income group if their income falls below this threshold. The threshold varies by family size and community size, as well as if income is calculated before or after taxes. For example, a single individual in Toronto would be said to be living in low income if his or her 2009 after-tax income was below $18,421.

Market basket measure: The MBM is a measure of the disposable income a family would need to be able to purchase a basket of goods that includes food, clothing, shelter, transportation, and other basic needs. The dollar value of the MBM varies by family size and composition, as well as community size and location. MBM data are available since 2000 only.

The three measures produce different results. In 2009, according to each measure, the following numbers of Canadians were living in low income:

• LICO—3.2 million (9.6 per cent of the population)
• MBM—3.5 million (10.6 per cent)
• LIM—4.4 million (13.3 per cent)

Table 6.1 shows how the three measures also produce different results over time. Using the LICO measure results in a decreasing share of people in low income from 1996 to 2007, followed by a slight upturn in 2008 and 2009. The LIM measure results in a share of people in low income that has increased since 1990. The MBM, which has data starting only in 2000, shows results similar to the LICO but with a sharper upturn in 2008 and 2009.

Social Classes in Canada

Does a person’s appearance indicate class? Do you know a person’s income by their car? There was a time in Canada when class was more visibly apparent. In some countries, like the United Kingdom, social class can still be guessed by differences in schooling, lifestyle, and even accent. In Canada, however, it is harder to determine class from outward appearances.

Some analyses of class emphasize variables like wealth, income, education, and occupation. Class stratification is not just determined by a group’s economic position but by the prestige of the group’s occupation, education, consumption, and lifestyle. It is a matter of status —the level of honour or prestige because of social position.

Some sociologists talk about upper, middle, and lower classes (with many subcategories within them) in a way that combine status categories with class categories. This is socio-economic status ( SES ), social position relative to others based on income, education, and occupation. For example, although plumbers might earn more than high school teachers, the status division between blue-collar work (people who “work with their hands”) and white-collar work (people who “work with their minds”) means that plumbers may be characterized as lower class but teachers as middle class. The division of classes into upper, middle, and lower can be arbitrary.

Social class is complex. Social class has at least three objective components:

• a group’s position in the occupational structure,
• a group’s position in the authority structure (i.e., who has authority over whom), and
• a group’s position in the property structure (i.e., ownership or non-ownership of capital).

Social class also has a subjective component involving lifestyle and how people perceive their place in the class hierarchy.

One way of distinguishing the classes focuses on the authority structure. Classes can be divided according to how much relative power and control members of a class have over their lives.

• The owning class not only have power and control over their own lives, their economic position gives them power and control over others’ lives as well.
• A “middle class” is composed of small business owners and educated, professional, or administrative labour, not because they have control other strata of society, but they do exert some control over their own work.
• The traditional working class has little control over their work or lives.

Below, we will explore the major divisions of Canadian social class and their key subcategories.

The Owning Class

The owning class is the powerful “elite.” In Canada, the richest 86 people (or families) account for 0.002 percent of the population, but in 2012 they had accumulated the equivalent wealth of the lowest 34 percent of the country’s population (McDonald, 2014). The combined net worth of these 86 families added up to $178 billion in 2012, which equalled the net worth of the lowest 11.4 million Canadians. In terms of income, in 2007 the average income of the richest 0.01 percent of Canadians was $3.833 million (Yalnizyan, 2010).

In addition to material goods, money also provides access to power.  Canada’s owning class has a lot of power. As corporate leaders, their decisions affect the jobs of millions. As media owners, they shape the nation’s identity. They run the major network television stations, radio broadcasts, newspapers, magazines, publishing houses, and sports franchises. As philanthropists, they support social causes. They also fund think tanks like the C. D. Howe Institute, AIMS and the Fraser Institute. Such think tanks usually promote the interests of business elites. As campaign contributors, they influence and fund politicians, usually to protect their own economic interests.

Canadian society has historically distinguished between “old money” (inherited wealth passed from one generation to the next) and “new money” (wealth you have earned and built yourself). While both types may have equal net worth, they have traditionally held different social standing. People of old money, firmly situated in the upper class for generations, have held high prestige. Their families have socialized them to know the customs, norms, and expectations that come with wealth. Often, the very wealthy do not work for wages. Some study business or become lawyers to manage the family fortune.

New money members of the owning class may not know the customs of the elite. They have not gone to the most exclusive schools. They have not established old-money social ties. People with new money might flaunt their wealth, buying sports cars and mansions, but they might still exhibit behaviours attributed to the middle and lower classes. For example, Toronto politicians Rob and Doug Ford were estimated to hold family assets worth $50 million, yet they presented themselves as just “average guys” who stand with their blue-collar constituents against “rich elitist people” (McArther, 2013; Warner, 2014). Rob Ford’s infamous crack cocaine smoking, public binge drinking, and use of foul language did not make him at home on old money circles.

The Middle Class

Many people call themselves middle class, but there are different ideas about what that means. People with annual incomes of $150,000 call themselves middle class, as do people who annually earn $30,000. That helps explain why some sociologists divide the middle class into upper and lower subcategories. These divisions are based on levels of status defined by levels of education, types of work, cultural capital, and the lifestyles.

Upper-middle-class people tend to hold bachelor’s and postgraduate degrees in subjects such as business, management, law, or medicine that lead to occupations in the professions. Professions are occupations that claim high levels of specialized technical and intellectual expertise and are regulated by autonomous professional organizations (like the Canadian Medical Association or legal bar associations). Lower-middle-class members hold bachelor’s degrees or diplomas from two-year community colleges that lead to various types of white collar, service, administrative, or paraprofessional occupations.

Comfort is a key concept to the middle class. Middle-class people work hard and live comfortable lives. Upper-middle-class people tend to pursue careers that earn even more comfortable incomes. They provide their families with large homes and expensive cars. They may go skiing or boating on vacation. Their children receive elite educations (Gilbert, 2010).

In the lower middle class, people hold jobs supervised by members of the upper middle class. They fill technical, lower-level management or administrative support positions. Compared to traditional working-class work, lower- middle-class jobs have more prestige and come with slightly higher pay cheques. With these incomes, people can afford a decent, mainstream lifestyle, but they struggle to maintain it. They generally do not have enough income

to build significant savings. In addition, their grip on class status is more precarious than in the upper tiers of the class system. When budgets are tight, lower-middle-class people are often lose their jobs.

The Traditional Working Class

The traditional working class is sometimes also referred to as being part of the lower class. Just like the middle and upper classes, the lower class can be divided into subsets: the working class, the working poor, and the underclass. Compared to the middle class, traditional working-class people have less of an educational background and usually earn smaller incomes. While there are many working-class trades that require skill and pay middle-class wages, the majority often work jobs that require little prior skill or experience, doing routine tasks under close supervision.

Traditional working-class people, the highest subcategory of the lower class, are usually equated with blue-collar types of jobs: “wage-workers who are engaged in the production of commodities, the extraction of natural resources, the production of food, the operation of the transportation network required for production and distribution, the construction industry, and the maintenance of energy and communication networks” (Veltmeyer, 1986, p. 83). The work is considered blue collar because it is hands-on and often physically demanding. The term “blue collar” comes from the traditional blue coveralls worn by manual labourers.

The Working Poor

The working poor, like some sections of the working class, unskilled, low-paying employment. However, their jobs rarely offer benefits such as retirement planning, and their positions are often seasonal or temporary. They work as migrant farm workers, house cleaners, and day labourers. Some are high school dropouts. Some are illiterate, unable to read job ads. Many do not vote because they do not believe that any politician will help change their situation (Beeghley, 2008).

How can people work full time and still be poor? Even working full time, more than a million of the working poor earn incomes too meagre to support a family. In 2012, 1.8 million working people (including 540,000 working full-time year round) earned less than Statistic Canada’s low income cut-off level, which defines poverty in Canada (Johnstone & Cooper, 2013). Minimum wage varies from province to province. However, a minimum wage is not necessarily a living wage. A living wage is the amount needed to meet a family’s basic needs and enable them to participate in community life (Johnstone & Cooper, 2013). Even for a single person, minimum wage is low. A married couple with children will have a hard time covering expenses.

The underclass live mainly in inner cities. Many are unemployed or underemployed. Those who hold jobs typically perform menial tasks for little pay. Some of the underclass are homeless. Social assistance provides a much-needed support through food assistance, medical care, housing, etc. for some.

Social Mobility

Social mobility refers to the ability to change positions within a social stratification system. This is a key concept in determining whether inequalities of condition limit people’s life chances or whether equality of opportunity exists in a society. A high degree of social mobility, upwards or downwards, would suggest that the stratification system of a society is open, that there is equality of opportunity.

Upward mobility refers to an upward shift in social class. Canadians celebrate the rags- to-riches achievements of celebrities like Guy Laliberté who went from street busking in Quebec to being the CEO of Cirque du Soleil, with a net worth of $2.5 billion. Actor and comedian Jim Carey lived with his family in camper van growing up in Scarborough, Ontario. Ron Joyce was a beat policemen in Hamilton before he co-founded Tim Hortons. CEO of Magna International Frank Stronach immigrated to Canada from Austria in 1955 with only $50. There are many stories of people from modest beginnings rising to fame and fortune. But the number of people who move from poverty to wealth is very small. Still, upward mobility is not only about becoming rich and famous. In Canada, people who earn a university degree, get a good job, or marry someone with a good income may move up socially.

Downward mobility indicates a lowering of social class. Some people move downward because of business setbacks, unemployment, or illness. Dropping out of school, losing a job, or becoming divorced may result in a loss of income or status and, therefore, downward social mobility.

Intergenerational mobility explains a difference in social class between different generations of a family. For example, an upper-class executive may have parents who belonged to the middle class. In turn, those parents may have been raised in the lower class. Patterns of intergenerational mobility can reflect long-term societal changes.

Intragenerational mobility describes a difference in social class between different members of the same generation. For example, the wealth and prestige experienced by one person may be quite different from that of his or her siblings.

Structural mobility happens when societal changes enable a whole group of people to move up or down the social class ladder. Structural mobility is attributable to changes in society, not individual changes.

In the first half of the 20th century industrialization expanded the Canadian economy, which raised the standard of living and led to upward structural mobility. In today’s work economy, the recession and the outsourcing of jobs overseas have contributed to high unemployment rates. Many people have experienced economic setbacks, creating a wave of downward structural mobility.

Some Canadians believe that people move up in class because of individual efforts and move down by their own acts. Ideally, access to rewards would exactly equal personal efforts and merits. Class position or other social characteristics (gender, race, ethnicity, etc.) would not affect the relationship between merit and rewards.

Other Canadians believe that equality of opportunity is a myth. This myth keeps people motivated to work hard and accept social inequality as the outcome of personal achievement. The equality of opportunity ideal hides structural inequality in society. The rich stay rich, and the poor stay poor.

Sociology studies about social mobility in Canada suggest there is some truth to both views.

Social mobility is measured by comparing either the occupational status or earnings between parents and children.  If children’s earnings or status remain the same as their parents, then there is no social mobility. If children’s earnings or status moves up or down with respect to their parents, then there is social mobility.

Canada has a relatively high rate of social mobility and equality of opportunity compared to the United States, where almost 50 percent of sons remain at the same income level as their fathers. In an international comparison, the United Kingdom had even lower social mobility than the United States, while Finland, Norway, and Denmark had greater social mobility than Canada. (Corak et. Al, 2010).

One of the key factors that distinguishes Canada’s social mobility from that of the United States is that the United States has a much greater degree of social inequality to start. The higher degree of social inequality is linked to lower degrees of social mobility. (Corak et al., 2010).

However, the data also show that Canada does not have true equality of opportunity. Class background significantly affects chances to get ahead. For example, the chance that a son born to a father in the 30 to 50 percent ranges of income would move up into the top 50 percent of income earners was about 50 percent (Yalnizyan, 2007). In contrast, a son in the bottom 20 percent of income earners had only a 38 percent chance of moving into the top 50 percent of income earners. For the bottom 20 percent of families, 62 percent of sons remained within the bottom 50 percent of income earners (Corak et al., 2010).

Class Traits

Class traits , also called class markers, are the typical behaviours, customs, and norms that define each class. They define a crucial subjective component of class identities. Class traits indicate the level of exposure a person has to a wide range of cultural resources. Class traits also indicate the amount of resources a person has to spend on items like hobbies, vacations, and leisure activities.

People may associate the upper class with enjoyment of costly, refined, or highly cultivated tastes — expensive clothing, luxury cars, high-end fundraisers, and opulent vacations. People may also believe that the middle and lower classes are more likely to enjoy camping, fishing, or hunting, shopping at large retailers, and participating in community activities. It is important to note that while these descriptions may be class traits, they may also simply be stereotypes. Moreover, just as class distinctions have blurred in recent decades, so too have class traits. A very wealthy person may enjoy bowling as much as opera. A factory worker could be a skilled French cook. Pop star Justin Bieber might dress in hoodies, ball caps, and ill fitting clothes, and a low-income hipster might own designer shoes.

These days, individual taste does not necessarily follow class lines. Still, you are not likely to see someone driving a Mercedes living in an inner-city neighbourhood. And most likely, a resident of a wealthy gated community will not be riding a bicycle to work. Class traits often develop based on cultural behaviours that stem from the resources available within each class.

Turn-of-the-Century “Social Problem Novels”: Sociological Gold Mines

Class distinctions were sharper in the 19th century and earlier, in part because people easily accepted them. The ideology of social order made class structure seem natural, right, and just.

In the late 19th and early 20th centuries, American and British novelists played a role in changing public perception. They published novels in which characters struggled to survive against a merciless class system. These dissenting authors used gender and morality to question the class system and expose its inequalities. They protested the suffering of urbanization and industrialization, drawing attention to these issues.

These “social problem novels,” sometimes called Victorian realism, forced middle-class readers into an uncomfortable position: The readers had to question and challenge the natural order of social class.

For speaking out so strongly about the social issues of class, authors were both praised and criticized. Most authors did not want to dissolve the class system. They wanted to bring about an awareness that would improve conditions for the lower classes, while maintaining their own higher-class positions (DeVine, 2005).

Soon, middle-class readers were not their only audience. In 1870, Forster’s Elementary Education Act required all children aged five through 12 in England and Wales to attend school. The act increased literacy levels among the urban poor, causing a rise in sales of cheap newspapers and magazines. Additionally, the increasing number of people who rode public transit systems created a demand for “railway literature,” as it was called (Williams, 1984). These reading materials are credited with the move toward democratization in England. By 1900 the British middle class established a rigid definition for itself, and England’s working class also began to self-identify and demand a better way of life.

Many of the novels of that era are seen as sociological goldmines. They are studied as existing sources because they detail the customs and mores of the upper, middle, and lower classes of that period in history.

Examples of “social problem” novels include Charles Dickens’s (1812-1870)  The Adventures of Oliver Twist (1838), which shocked readers with its brutal portrayal of the realities of poverty, vice, and crime. Thomas Hardy’s (1840-1928)  Tess of the d’Urbervilles (1891) was considered revolutionary by critics for its depiction of working-class women (DeVine, 2005), and American novelist Theodore Dreiser’s (1871-1945)  Sister Carrie (1900) portrayed an accurate and detailed description of early Chicago.

6.3. Global Stratification and Inequality

Global stratification compares the wealth, economic stability, and power of countries across the world. Global stratification highlights worldwide patterns of social inequality.

In the early years of civilization, hunter-gatherer and agrarian societies lived off the Earth, rarely interacting with other societies. When explorers began travelling, societies began trading goods as well as ideas and customs.

In the 19th century, the Industrial Revolution created great wealth in Western Europe and North America.  Mechanical inventions sent large numbers of people to work in factories and coal mines — not only men, but also women and children. By the late 19th and early 20th centuries, industrial technology had gradually raised the standard of living for many people in the United States and Europe.

The Industrial Revolution also saw the rise of vast inequalities between countries that were industrialized and those that were not. As some nations embraced technology and increased wealth and goods, others maintained traditional ways. The wealth gap widened with nonindustrialized nations. Researchers suggest that the disparity also resulted from power differences. Critical sociology believes that industrializing nations took advantage of the resources of traditional nations. As industrialized nations became rich, other nations became poor (Rostow, 1960).

Sociologists studying global stratification analyze economic comparisons between nations. Income, purchasing power, and wealth are used to calculate global stratification. Global stratification also compares the quality of life.

Poverty levels vary greatly. The poor in wealthy countries like Canada or Europe are better off than the poor in countries such as Mali or India. In 2002 the United Nations implemented the Millennium Project, an attempt to cut poverty worldwide by the year 2015. To reach the project’s goal, planners in 2006 estimated that industrialized nations must set aside 0.7 percent of their gross national income — the total value of the nation’s goods and services — to aid developing countries (Landler & Sanger, 2009; Millennium Project, 2006). The project was successful in reaching its target of cutting extreme poverty by half — the number of people living on $1.25/ day or less — but fell short of halving the number of people suffering from hunger. Undernourishment in developing regions fell from 23.3% to 12.9% (United Nations, 2015).

Neoliberalism and Globalization

As you read in the chapter on culture, globalization refers to the integration of international trade and finance.

Globalization intensified after World War II, and especially in the late 20th century. New technologies allowed large amounts of capital and goods to circulate globally. The globalization of investment and production means that capital can move freely around the world to where labour costs are cheapest and profit greatest. Corporate, political, environmental decisions are no longer based on state boundaries. This lessens the ability of national governments to control policy.

Neoliberalism is a set of policies in which the state reduces its role in providing public services, regulating industry, redistributing wealth, and protecting “the commons” —the collective property that exists for everyone to share (the environment, public and community facilities, airwaves, etc.). Neoliberalism is not only a response to the economic crises and reduction in profits within a country; it is also a response to the competition for globalized capital. Neoliberal policy aims to attract increasingly fickle global capital by making entire countries more “competitive.” The result, as David Harvey argues, has been to massively shift the balance of power to the global economic elites (2005, pp. 16–19). Wealth has been redistributed upwards.

Globalization puts pressure on government policy. Changes in government policy contribute to growing inequality in Canada. Canada moved from a welfare state model of resource redistribution to a neoliberal model of free market resources distribution.

What is the welfare state? After World War II a kind of labour-management “accord” existed in Canada. This involved the recognition of labour unions, the mediation of the state in capital/labour disputes, the use of taxes to address economic recessions, and a social safety. This set of policies is known as the welfare state. In a high wage/high consumption economy, the ability of individuals to continue to consume was important, so unemployment insurance, pensions, health care, and disability benefits were important. This labour-management accord also reaffirmed the rights of private property or capital to introduce new technology, to reorganize production, and to invest wherever they pleased. Therefore, it was not a system of economic democracy or socialism. Nevertheless, the claims of full employment, continued prosperity, and the creation of a “just society” seemed possible within the capitalist economic system.

When the welfare state system began to shown strain in the late 1960s and early 1970s, the relationship between the state and the economy began to change again. With a global economy of lean production and precarious employment, the state began withdrawing from universal social services and social security. Neoliberalism describes the new thinking by government. Neoliberalism abandons the interventionist model of the welfare state to emphasize the use of “free market” to regulate society.

Neoliberalist policies are promoted as ways of addressing the “inefficiency of big government,” the “burden on the taxpayer,” the “need to cut red tape,” and the “culture of entitlement and welfare dependency.” Neoliberalism favours competitive marketplace over government regulation. The market is said to promote efficiency, lower costs, good decision making, non-favouritism, and a disciplined work ethic, etc.

The facts often tell a different story. For example, government-funded health care in Canada costs far less per person than private health care in the United States (OECD, 2015). Norway has much higher taxes than Canada, much lower unemployment, lower income inequality, lower inflation, better public services, a higher standard of living. Norway nevertheless has a globally competitive corporate sector with substantial state control (especially in the areas of oil and gas production, which is 80% owned by the Norwegian state) (Campbell, 2013). Deregulation polices caused the financial crisis of 2008. Some neoliberal economists now acknowledge that the free market model is flawed (CBC News, 2013).

The new global capitalism and politics has been described as the reemergence of empire (Hardt & Negri, 2000). Rather than a system of independent nation-states, the world can be seen as a single unit within which state sovereignty has been transferred to a higher entity (Negri, 2004, p. 59). Trade agreements no longer restricttheflowofcapitalandgoods. Frequentglobal“policeactions” and trade embargoes by various “coalitions of the willing” enforce peace or intervene in domestic policy (in, for example, Iraq, Yugoslavia, Somalia, Afghanistan, Iran, Libya, and Syria). Similarly, the Kyoto Protocol on climate change or the Ottawa Treaty on landmines are examples of global initiatives that blurtheboundariesofnationstates.

Empire in this sense refers to a new global form of sovereignty. Antonio Negri states that this is not the same as saying that the world is dominated by a country like the United States or China; rather, power lies with a “network” of dominant nation-states, supranational institutions (the UN, OPEC, IMF, WTO, G8, NATO, etc.) and major capitalist corporations (Hardt & Negri, 2000; Negri, 2004).  Empire is not like imperialism during the era of colonialism. Empire is a new political form that emerged in response to the dynamics of global capitalism.

Chapter Summary

What is social inequality.

Stratification systems are either closed, meaning they allow little change in social position, or open, meaning they allow movement and interaction between the layers. In a caste system, social standing is based on ascribed status or birth. Class systems are open, with achievement playing a role in social position. People fall into classes based on factors like wealth, income, education, and occupation.

Social Inequality and Mobility in Canada

There are three main classes in Canada: the owning class, middle class, and traditional working class. Social mobility describes a shift from one social class to another. While Canada is supposed to be a meritocracy, many factors hinder upward social mobility.

Global Stratification and Inequality

Global stratification compares the wealth, economic stability, status, and power of countries. By comparing income and productivity between nations, researchers can better identify global inequalities.

6.4. Theoretical Perspectives on Social Inequality

Social stratification can be examined from different sociological perspectives — functionalism, critical sociology, and symbolic interactionism. The functionalist perspective states that inequality serves an important function in aligning individual merit and motivation with social position. Critical sociologists observe that stratification promotes inequality, such as between rich business owners and exploited workers. Symbolic interactionists examine stratification from a micro-level perspective. They observe how social standing affects people’s everyday interactions, particularly the tendency to interact with people of like status, and how the concept of “social class” is constructed and maintained through cultural distinctions of education and taste (or cultural capital) and conspicuous consumption.

absolute poverty : A severe deprivation of basic human needs, including food, safe drinking water, sanitation facilities, health, shelter, education and information.

achieved status : A status received through individual effort or merits (eg. occupation, educational level, moral character, etc.).

ascribed status : A status received by virtue of being born into a category or group (eg. hereditary position, gender, race, etc.).

bourgeoisie : In capitalism, the owning class who live from the proceeds of owning or controlling productive property (capital assets like factories and machinery, or capital itself in the form of investments, stocks, and bonds).

caste system : A system in which people are born into a social standing that they will retain their entire lives.

class : A group who shares a common social status based on factors like wealth, income, education, and occupation.

class system : Social standing based on social factors and individual accomplishments.

class traits : The typical behaviours, customs, and norms that define each class, also called class markers.

conspicuous consumption : Buying and using products to make a statement about social standing.

cultural capital : Cultural assets in the form of knowledge, education, and taste that can be transferred intergenerationally.

downward mobility : A lowering of one’s social class.

empire : A new supra-national, global form of sovereignty whose territory is the entire globe.

equality of condition : A situation in which everyone in a society has a similar level of wealth, status, and power.

equality of opportunity : A situation in which everyone in a society has an equal chance to pursue economic or social rewards.

global stratification : A comparison of the wealth, economic stability, status, and power of countries.

globalization : The integration of international trade and finance markets.

income : The money a person earns from work or investments.

intergenerational mobility : A difference in social class between different generations of a family.

intragenerational mobility : A difference in social class between different members of the same generation.

living wage : The income needed to meet a family’s basic needs and enable them to participate in community life.

lumpenproletariat : In capitalism, the underclass of chronically unemployed or irregularly employed who are in and out of the workforce.

means of production : Productive property, including the things used to produce the goods and services needed for survival: tools, technologies, resources, land, workplaces, etc.

meritocracy : An ideal system in which personal effort—or merit—determines social standing.

neoliberalism : A set of policies in which the state reduces its role in providing public services, regulating industry, redistributing wealth, and protecting the commons while advocating the use of free market mechanisms to regulate society.

power : How many people a person must take orders from versus how many people a person can give orders to.

proletariat : Those who seek to establish a sustainable standard of living by maintaining the level of their wages and the level of employment in society.

relative poverty : Living without the minimum amount of income or resources needed to be able to participate in the ordinary living patterns, customs, and activities of a society.

social inequality : The unequal distribution of valued resources, rewards, and positions in a society.

social mobility : The ability to change positions within a social stratification system.

social stratification : A socioeconomic system that divides society’s members into categories ranking from high to low, based on things like wealth, power, and prestige.

socio-economic status (SES) : A group’s social position in a hierarchy based on income, education, and occupation.

standard of living : The level of wealth available to acquire material goods and comforts to maintain a particular socioeconomic lifestyle.

status : The degree of honour or prestige one has in the eyes of others.

structural mobility : When societal changes enable a whole group of people to move up or down the class ladder.

upward mobility : An increase — or upward shift — in social class.

Chapter Quiz

• They are run by secretive governments.
• People cannot change their social standings.
• Most have been outlawed.
• They exist only in rural areas.
• They allow for movement between the classes.
• People are more open-minded.
• People are encouraged to socialize within their class.
• They do not have clearly defined layers.
• First-shift factory worker
• First-generation college student
• Firstborn son who inherits the family business
• First-time interviewee who is hired for a job
• A suburban family lives in a modest ranch home and enjoys a nice vacation each summer.
• A single mother receives welfare and struggles to find adequate employment.
• A college dropout launches an online company that earns millions in its first year.
• A celebrity actress owns homes in three countries.
• Receive the same pay as all the other physician’s assistants
• Be encouraged to earn a higher degree to seek a better position
• Most likely marry a professional at the same level
• Earn a pay raise for doing excellent work
• Middle class
• Upper class
• Lower class
• No specific class
• An individual moves up the class ladder.
• An individual moves down the class ladder.
• A large group moves up or down the class ladder due to societal changes.
• A member of a family belongs to a different class than his or her siblings.
• class traits
• A janitor belongs to the same social class as his grandmother.
• An executive belongs to a different class than her parents.
• An editor shares the same social class as his cousin.
• A lawyer belongs to a different class than her sister.
• all equal in status
• not equally valued
• assigned to a person for life
• not part of a person’s self-identity
• Ranks society members into categories
• Destroys competition between society members
• Allows society members to choose their social standing
• Reflects personal choices of society members
• Planetary movement

Short Answer

Track the social stratification of your family tree. Did the social standing of your parents differ from the social standing of your grandparents and great-grandparents? What social traits were handed down by your forebears? Are there any exogamous marriages in your history? Does your family exhibit status consistencies or inconsistencies?

What defines communities that have a low-status consistency? What are the ramifications, both positive and negative, of cultures with low-status consistency? Think of specific examples to support your ideas.

Review the concept of stratification. Now choose a group of people you have observed and been a part of — for example, cousins, high school friends, classmates, sport teammates, or coworkers. How does the structure of the social group you chose adhere to the concept of stratification?

6.2. Social Inequality and Mobility in Canada

Which social class do you and your family belong to? Are you in a different social class than your grandparents and great-grandparents? Does your class differ from your social standing and, if so, how? What aspects of your societal situation establish you in a social class?

What class traits define your peer group? For example, what speech patterns or clothing trends do you and your friends share? What cultural elements, such as taste in music or hobbies, define your peer group? How do you see this set of class traits as different from other classes either above or below yours?

Provide examples of class inequality and of status inequality in your community. Are there examples in which class inequality differs from status inequality? What is the significance of these differences?

Why is it important to understand and be aware of global stratification? Make a list of specific issues that are related to global stratification. For inspiration, turn on a news channel or read the newspaper. Next, choose a topic from your list and look at it more closely. Who is affected by this issue? How is the issue specifically related to global stratification?

Compare a family that lives in a grass hut in Ethiopia to a Canadian family living in a mobile home in Canada. Assuming both exist at or below the poverty levels established by their country, how are the families’ lifestyles and economic situations similar and how are they different?

Further Research

The New York Times investigated social stratification in their series of articles called “Class Matters.” The online accompaniment to the series includes an interactive graphic called “How Class Works,” which tallies four factors — occupation, education, income, and wealth — and places an individual within a certain class and percentile. What class describes you? Test your class rank on the interactive site: http://www.nytimes.com/packages/html/national/20050515_CLASS_GRAPHIC/index_03.html

Mark Ackbar made a documentary about social class and the rise of the corporation called The Corporation . The filmmakers interviewed corporate insiders and critics. The accompanying website is full of information, resource guides, and study guides to the film.: http://thecorporation.com/.

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Image Attributions

Figure 6.2. Statue of Ted Rogers by Oaktree (https://commons.wikimedia.org/wiki/File:Ted_Rogers_Statue_Toronto.JPG) is used under a Free Art License .

Figure 6.6. Downtown Eastside by Wayne Stadler (https://www.flickr.com/photos/waynerd/3081073598/) used under a CC BY-NC-ND 2.0 license (https://creativecommons.org/licenses/by-nc-nd/2.0/)

Figure 6.7: Miners in Nanaimo, BC, Image B-03624, Royal BC Museum, BC Archives, is in the public domain (http://en.wikipedia.org/wiki/Public_domain)

Figure 6.8. James & Laura Dunsmuir in Italian Garden, CA RRU 2011.025-B-1-11, Royal Roads University Archives, is in the public domain (http://en.wikipedia.org/wiki/Public_domain)

Figure 6.11. Charles Dickens by Jeremiah Gurney (http://commons.wikimedia.org/wiki/File:Dickens_Gurney_head.jpg) is in the public domain (http://en.wikipedia.org/wiki/Public_domain)

Figure 6._ Karl Marx courtesy of John Mayall (https://commons.wikimedia.org/wiki/Category:Portraits_of_Karl_Marx#/media/File:Karl_Marx_coloured.gif) is in the public domain

Figure 6.20. Pierre Trudeau 1975 (https://commons.wikimedia.org/wiki/File:Pierre_Trudeau_%281975%29.jpg) used under a CC BY-SA 3.0 license (https://creativecommons.org/licenses/by-sa/3.0/deed.en)

Figure 6.21. 1964 …Solo and Illya! by James Vaughan (https://www.flickr.com/photos/x-ray_delta_one/4169455648) used under a CC BY-NC-SA 2.0 license (https://creativecommons.org/licenses/by-nc-sa/2.0/)

Figure 6.22. Towards the Dawn by the Cooperative Commonwealth Federation (https://commons.wikimedia.org/wiki/File:Towards_the_Dawn.jpg) is in the public domain.

Figure 6.23. Imelda Marcos shoes by Vince Lamb (https://www.flickr.com/photos/22320444@N08/4999794433/) used under a CC BY-NC-SA 2.0 license (https://creativecommons.org/licenses/by-nc-sa/2.0/).

Table 6.2. Share of Aggregate Incomes Received by each Quintile of Families and Unattached Individuals in Osberg (2008) is used under a CC BY-NC-ND 3.0 license (https://www.policyalternatives.ca/terms)

Table 6.3. Gini index of inequality: 1980-2005 in Osberg (2008) is used under a CC BY-NC-ND 3.0 license (https://www.policyalternatives.ca/terms)

Table 6.4. Gini Coefficients of Income Concentration in 27 OECD Countries in Osberg (2008) is used under a CC BY-NC-ND 3.0 license (https://www.policyalternatives.ca/terms)

Long Description

Figure 6.22: Long Description: A family walks up a road towards the rising sun. The sun is labeled “CCF” with the suns rays saying, “Prosperity, justice, democracy, unity, equality, freedom, security.”

Solutions to Chapter Quiz

1 b, | 2 a, | 3 d, | 4 b, | 5 c, | 6 d, | 7 a, | 8 c, | 9 a, | 10 b, | 11 b, |  12 a, | 13 d, | 14 c, | 15 a, | 16 b, | 17 b, | 18 d [Return to Quiz]

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• > Journals
• > Canadian Journal of Political Science/Revue canadienne de science politique
• > Volume 54 Issue 4
• > The Puzzling Persistence of Racial Inequality in Canada

Article contents

• Path Dependency, Policy Drift and the Role of Entrenched Ideas
• Racial Diversity and Racial Economic Inequality
• The Policy Structures

The Puzzling Persistence of Racial Inequality in Canada

Published online by Cambridge University Press:  23 August 2021

This article examines the failure of Canadian public policy in addressing racial economic inequality directly. Our analysis contends that Canada's key policy regimes were established in the postwar era, when approximately 96 per cent of Canadians were of European descent. As a result, the frameworks, problem definitions and policy tools inherited from that era were never intended to mitigate racial economic inequality. Moreover, this policy inheritance was deeply shaped by liberal universalism, which rejected racial distinctions in law and policy. These norms were carried forward into the more racially diverse Canada of today, where they have steered attention away from the use of racial categories in policy design. As a result, racial inequality was not a central priority during major policy reforms to core policy regimes in recent decades. In theoretical terms, our analysis contributes to Canadian Political Development through a sustained consideration of the intersecting roles of ideational frameworks, path dependency and policy inertia.

Cet article cherche à expliquer la persistance déroutante de l'inégalité économique raciale au Canada. Nous soutenons que les principaux régimes politiques établis entre les années 1950 et 1980 - l'aide sociale, l'immigration, le multiculturalisme et la Charte des droits - n'ont pas été conçus pour éliminer l'inégalité raciale parce qu'ils ont été élaborés à une époque où environ 96% des Canadiens étaient d'origine européenne. Ces structures politiques ont donc été façonnées par les préoccupations et les normes d'une population de descendance européenne. Lorsque l'inégalité économique raciale est devenue plus répandue, l'architecture politique n'a pas été réorganisée pour s'attaquer directement au problème. Les normes universalistes profondément ancrées dans les architectures politiques d'après-guerre ont eu tendance à empêcher une attaque directe contre l'inégalité économique raciale. En termes théoriques, notre analyse contribue à l'exploration de la race et du développement politique canadien par une considération soutenue des rôles croisés des cadres conceptuels, du poids du passé et de la dérive décisionnelle.

At first glance, Canada presents a puzzle in the context of racial inequality. The country is often seen as having a robust social model and as being an international leader in the development of multiculturalism policies and cultural tolerance. Yet these policies, which together should work to enhance equality and social solidarity, coexist with significant levels of racial economic inequality, smaller perhaps than in the United States but significant nevertheless.

In our view, the fact of racial economic inequality itself is not puzzling; there is a long history of a specifically Canadian racial order with tangible effects on the uneven distribution of wealth over time (Thobani, Reference Thobani 2007 ). However, the continued persistence of racial economic inequality well into the twenty-first century raises important questions about the efficacy and equity of the complex policy architecture that defines the socio-economic landscape. This includes a welfare state including universal health care, a race-neutral system of immigrant selection, an official multiculturalism policy and a Charter of Rights and Freedoms with powerful anti-discrimination provisions. Combined, these initiatives built a social safety net and a model of diversity governance that many assume are more robust, redistributive and inclusive than those that exist south of the 49th parallel. Yet racial economic disparities stubbornly persist, in some cases across multiple generations. Despite this fact, racial economic inequality has not emerged as a central driver in the recent restructuring of core social programs. Understanding why seems especially important as racial minorities have borne a disproportionate burden during the COVID-19 pandemic and the Black Lives Matter movement has challenged existing understandings of power and privilege.

The purpose of this article is to examine the failure of Canadian public policy to address racial economic inequality directly. Why do policies not focus on alleviating racial economic inequality? And why has racial inequality not emerged more forcefully as a central feature of policy deliberations?

In our view, answering these questions requires an understanding of Canadian political development since the middle of the twentieth century. This history can be usefully divided into two key periods: the postwar era from the 1940s to the early 1980s; and the decades from the 1980s to the first decades of the twenty-first century. The first part of our argument posits that the frameworks, problem definitions and policy tools developed in the postwar era were never intended to address racial economic inequality. The social programs, immigration regulations, multiculturalism policies and the Charter of Rights and Freedoms were all institutionalized during an era in which the Canadian population was overwhelmingly of European descent. In the period 1960 to 1980, over 96 per cent of Canadians traced their ancestry to Europe. People identifying as Aboriginal represented less than 2 per cent of the population and faced barriers to political mobilization; and, in combination, Asians, Blacks and other racial minorities also represented less than 2 per cent (Li, Reference Li 2000 ). As a result, the policy regime put in place in the postwar era was shaped by the beliefs and concerns of a white European–descended population.

During the last decades of the twentieth and early decades of the twenty-first centuries, shifting immigration patterns rapidly transformed Canada into one of the most racially and ethnically diverse countries in the Organisation of Economic Co-operation and Development (OECD). By the time of the 2016 census, racial minorities represented approximately 23 per cent of the population, and major cities such as Toronto and Vancouver had become minorities-majority cities. In addition, during the same decades, virtually all the core government programs inherited from the postwar generation were restructured in response to changing economic and social pressures. Nevertheless, although racial economic inequality was becoming more evident and increasingly inappropriate given the normative egalitarian discourse of the period, the retooling of the policy architecture still paid little attention to racial economic inequality. Why?

The second part of our argument contends that universalist norms were deeply embedded in the frameworks, problem definitions and policy tools inherited from the postwar generation. The postwar era represented a watershed in attitudes toward race and human rights, shaped by the rejection of Nazism and scientific racism, the spread of decolonization and the energetic civil rights movements that emerged in many countries. Racial distinctions in law and policy were increasingly “challenged by the human rights universalism of the postwar period” (Triadafilopoulos, Reference Triadafilopoulos 2012 : 55; see also Kymlicka, Reference Kymlicka, Banting, Courchene and Seidle 2007 ). These norms were carried forward into the more racially diverse Canada, where they have tended to steer attention away from the use of racial categories in policy design and evaluation. As we shall see, in spite of recognizable racial economic inequality, race did not register in the politics of welfare state retrenchment of the 1990s or the more recent expansion after 2015. Nor did racial economic inequality frame the dramatic revisions to immigration policy in recent decades or the quieter evolution of multiculturalism policy. Anti-discrimination policy is a partial exception to this argument, but the policy tools developed to address directly the economic dimensions of racial inequality, such as the Employment Equity Act, are relatively weak.

In theoretical terms, our research seeks to contribute to the literature on Canadian Political Development, which asks “large-scale, long-term, big-picture questions of Canadian political science” by examining the causes and consequences of durable shifts in governing authority, as well as the ways that the entrenchment of institutional arrangements and public policies at certain historical moments can foreclose otherwise viable alternatives for political action (Lucas and Vipond, Reference Lucas and Vipond 2017 : 234; see also Orren and Skowronek, Reference Orren and Skowronek 2004 ). Our contributions are two-fold. First, we attempt to take up Miriam Smith's ( Reference Smith 2009 ) call for deeper and more complicated analyses of diversity as a question of political power related to the protection of rights, the allocation of resources and access to political participation. While the state's role in the production of racial inequality has been a consistent theme in the extensive literature on race and American Political Development (Lowndes et al., Reference Lowndes, Novkov and Warren 2008 ; King and Smith, Reference King and Smith 2011 ; Johnson, Reference Johnson, Valelly, Mettler and Lieberman 2016 ), the deep and constitutive connections between the development of institutional arrangements and public policies and the allocation of power and privilege are less explored in Canada.

Second, our analysis includes a sustained consideration of the intersecting roles of ideational frameworks, path dependency and policy drift. In our view, policy drift in this context largely occurred because of the pervasive influence of institutionalized norms and ideas. Entrenched understandings of core social programs define their basic purposes and the tools they make available with which to respond to changing conditions. These understandings, we argue, are fundamentally premised on the principles of universalism, which tend to render race and racism as either incidental or antithetical to the operation of Canadian liberalism. They are embedded in political institutions and policy regimes and thus contribute to the persistence of a policy architecture that is based on egalitarian principles and yet has failed to rectify circumstances of racial economic inequality.

The analysis here focuses on the experience of racial minorities that owe their presence in Canada to immigration. Footnote 1 Indigenous peoples face even greater economic problems, but the reconciliation agenda raises a distinct set of policy issues. Indigenous peoples define themselves as nations, not racial groups, and pursue a different agenda rooted in national identity, autonomy, self-governance and ownership of land. Their agenda has a greater similarity to that of the Québécois than of immigrant racial minorities.

We advance our argument in four sections. The first section provides an overview of our theoretical argument about policy drift, path dependency and the causal role of ideas in political analysis. The second section presents evidence on the persistence of racial economic inequality in Canada. The third and longest section examines major developments in four key policy areas: the welfare state, immigration policy, multiculturalism and anti-discrimination protections. The final section pulls the threads of our argument together.

1. Path Dependency, Policy Drift and the Role of Entrenched Ideas

Institutionalist interpretations provide some insight into the relative silence of the Canadian policy architecture on the economic disadvantage faced by racial minorities by analyzing both formal institutions and dominant ideas embedded in them. Students of Canadian politics have long paid heed to political institutions as powerful formations and understand that long-established government programs represent key institutions that define the terrain on which politics is played out (Smith, Reference Smith 2009 : 843; Lecours, Reference Lecours 2005 ; Lucas and Vipond, Reference Lucas and Vipond 2017 ). When first introduced, major programs reflect a particular conception of the problems to be addressed and provide a particular set of policy tools to address them. As historical institutionalists have argued, these early choices shape future choices, increasing the costs of shifting to a new policy path in later years. Such institutional dynamics contribute to path dependency and policy drift, helping to explain the persistence of policy regimes even after the social conditions that initially gave rise to them have faded (Peters et al., Reference Peters, Pierre and King 2005 ). In some cases, policy drift emerges because political agents actively choose not to respond to environmental changes or are purposefully obstructed by social coalitions that block change (Emmenegger, Reference Emmenegger 2021 ). For example, in Winner-Take-All Politics , Jacob Hacker and Paul Pierson ( Reference Hacker and Pierson 2010 ) argue that the extraordinary nature of wealth inequality in the United States is a direct result of policy drift, in that increased ideologically driven gridlock between the two major parties in Congress has favoured the status quo by preserving older institutional rules and regulations that enable and exacerbate wealth disparities. Institutional drift is especially widespread in American politics because of the separation of powers, which makes it far easier to prevent policy change than to enable it.

However, another form of policy drift, perhaps better called policy inertia, results from institutionalization of ideas and ideologies, which frame problems in ways that better reflect the past than the present. Footnote 2 According to scholars of discursive institutionalism, ideas often become embedded in institutions, and established policy paradigms become taken for granted as simply “common sense,” creating cognitive locks that guide particular courses of action (Béland and Cox, Reference Béland, Cox, Béland and Cox 2011 : 3–4; see also Hall, Reference Hall, Fioretos, Falleti and Sheingate 2016 : 35–36; Schmidt, Reference Schmidt 2008 ). Ideas are dynamic and may exist at the level of specific policy proposals and problem definitions or, in our case, as public philosophies that “serve as a kind of meta-problem definition for political actors, providing a way of seeing the public issues that are on their docket” (Mehta, Reference Mehta, Béland and Cox 2011 : 42). Because ideas that are embedded in institutions can legitimize and normalize power differentials among social groups, the study of these ideas is important for understanding the nature of power, domination and inequality. Research on the development of racial orders in the American context stresses the centrality of institutions as “carriers of ideas,” a formulation that “appreciates the interconnection between institutions, understood as governing arrangements and the structures and organizations connected to them, and the ideas that animate political actors, shape their goals, and thus give content to the patterns of behavior that institutions construct” (Lieberman, Reference Lieberman, Béland and Cox 2011 : 215). We suggest that policy inertia can result from dominant ideologies—in this instance, the universalistic principles of Canadian liberalism—that frame policy problems in ways that are not conducive to decisive policy action on racial economic inequality.

The distinctive features of liberalism include individualism, egalitarianism, universalism and meliorism (Gray, Reference Gray 1995 ). Several of these dimensions are critical to understanding the dynamics of the specific policy domains explored below. Nevertheless, the common thread running through the analysis is the commitment to moral universalism at the heart of liberalism, which has generated an enduring tension with the realities of racial difference. Liberal ideologies profess to treat all individuals equally and resist taking ascriptive characteristics such as race or gender into account in the formulation of public policy. In practice, however, such norms can work to create, maintain and reinforce structural and institutional racial inequalities, often by refusing to acknowledge prescient disparities. Much like the way that feminist analyses of liberalism emphasize that the assumption of a public/private divide in liberal ideology and the institutional arrangements of the welfare state obscure a fundamental source of power and inequality in gender relations (O'Connor et al., Reference O'Connor, Orloff and Shaver 1999 : 49–50), the tendency to view racism as an illiberal aberration hides the ways in which racial inequality can be exacerbated or simply ignored by seemingly universal public policies.

An analysis of the nature of Canadian liberalism and the ways that the influence of both toryism and socialism has caused it to diverge from liberal ideologies in the United States is a well-trodden path in the Canadian political science literature (Hartz, Reference Hartz 1955 ; Horowitz, Reference Horowitz 1966 ; Forbes, Reference Forbes 1987 ). There are also distinctions to be made among varieties of liberalism. The dominance of the classical liberalism of the nineteenth and early twentieth centuries, which gave priority to individual rights and limited state power, was challenged in the mid-twentieth century by a social or reformist liberalism, which shared classical liberalism's concern with individual freedom but also incorporated new ideas about social citizenship and an enlarged role of the state in enhancing egalitarian values through the welfare state and other policies (O'Connor et al., Reference O'Connor, Orloff and Shaver 1999 : 450; Jeffrey, Reference Jeffrey, McGrane and Hibbert 2019 ). However, classical liberalism did not disappear entirely. It flourished again later in the century in the form of neoliberalism, which as both an ideology and set of policies, led to the transformation of government in the 1980s and 1990s. This process unfolded through an extension of and commitment to market principles combined with state downsizing, the privatization of public assets, the deregulation or elimination of state services, trade liberalization and an emphasis on technocratic, “efficient” market-based solutions to policy problems (McBride, Reference McBride 1992 ). In recent years, the reformist side of Canadian liberalism grew ascendant again, as governments responded to concerns about the sharp rise in precarious employment and income inequality. As Rianne Mahon ( Reference Mahon 2008 ) argues, the contemporary Canadian welfare state is shaped by a shifting balance between neoliberalism and “inclusive” or “social liberalism.”

The underlying universalism of the welfare state, immigration policy, multiculturalism policy and anti-discrimination protections in Canada runs counter to the denominational nature of racial identification. This tendency is reinforced by the traditional role that social policies have played as nation-building projects in the face of persistent territorial and linguistic divisions, which at times have threatened the political integrity of the country. Universal social policies have played an integrative role, helping to reinforce a sense of national belonging; over time, many Canadians, especially in English Canada, came to see national social programs as part of the Canadian identity, part of the social glue holding their vast country together (Banting, Reference Banting, Liebfried and Pierson 1995 ). Canadian national identity accommodates and celebrates diversity in many ways; however, it has also tended to deflect attention from race as such. As we shall see, social problems that might elsewhere be interpreted through the prism of race tend to be seen as issues of immigration status or cultural or linguistic difference, and policy tools have been deployed accordingly. This is not to say that race is completely absent from political contestation and controversy. However, there is something curiously indirect about the Canadian approach, at least in government circles. Government publications and official statistics prefer the term visible minorities , which the United Nations Committee on the Elimination of Racial Discrimination has criticized for rendering invisible the plight of distinct racialized groups (United Nations, 2017 ). More tellingly, Canadian governments at all levels have been slower to gather and publish data based on race than has the United States (Thompson, Reference Thompson 2016 ), which recently has undoubtedly hampered the country's ability to detect and correct the racial disparities in infection and treatment during the COVID-19 pandemic. Race as a formal organizing principle still has only a modest presence in Canadian policy. Footnote 3

Our analysis confirms a central finding of race and ethnic politics scholarship on the conceptual distinction between explicit racism of the past and the more implicit but still pervasive systemic racism of the present (Soss and Weaver, Reference Soss and Weaver 2017 ; Hanchard, Reference Hanchard 2018 ). Institutional racism manifests as the rules, norms and/or patterns of behaviour that perpetuate relative disadvantage for some racial groups and advantage for others; the institutionalization of implicit racial bias; the ways that seemingly universal rules affect populations differently and result in the reification of pre-existing racial inequalities; the way that seemingly universal rules are, in fact, designed to advantage white populations and disadvantage non-white populations; or any combination of these tendencies. This form of racism does not require the deliberate and intentional actions of policy drift; in fact, it does not necessarily depend on agents at all. Institutional racism is, by nature, self-perpetuating, and so inaction—or inertia—simply works to reinforce the status quo.

Explaining why something did not happen is always challenging. However, we argue that, in combination, formal political institutions and long-established program structures that institutionalized conceptions of liberal universalism help to explain the failure to address racial economic inequality. Of course, this situation was compounded by other forces, including the increasingly decentralized nature of the Canadian federation, the political marginalization of cities, the growth of conservative populism and the decline of equality-seeking social movements, all of which weakened the ability of the federal government to formulate decisive action on racial inequality. Our analysis complicates this picture by demonstrating the important role of policy inertia, the potentially obscuring role of dominant narratives and the extent to which inaction is a consequential form of political action.

2. Racial Diversity and Racial Economic Inequality

The speed of the change in the racial composition of the Canadian population is captured in Figure 1 . As noted earlier, in the 1981 census, racial minorities and Aboriginal peoples represented only 4 per cent of the population; in the 2016 census, 22.3 per cent of the population self-identified as a visible minority, a number expected to grow to a third of the population within two decades. Toronto is a minorities-majority city, at 51.4 per cent, and Vancouver is close (48.9 per cent). By any standard, this is a rapid change in racial demography.

Figure 1. Number and Proportion of Visible Minority Population in Canada, 1981 to 2036

Sources: Statistics Canada, Census of Population, 1981 to 2006, 2016; National Household Survey, 2011; Immigration and Diversity: Population Projections for Canada and its Regions, 2011 to 2036.

Canadians have long considered their country a mosaic of ethnic hues. However, as John Porter ( Reference Porter 1965 ) pointed out a half century ago, this was a vertical mosaic, with British-origin Canadians at the apex of an ethno-racial hierarchy. Much has changed in the intervening years. The income differences between English- and French-speaking Canada have almost disappeared, and a number of other white ethnic groups now earn more on average than British-origin workers. However, as Canada became much more racially diverse in the last quarter of the twentieth century, Canadian inequality diversified as well.

Table 1 provides one view. It compares poverty levels among racial minority groups with the poverty rate in the rest of the population in 2015. The table measures the incidence of poverty in terms of both market income, primarily wages and salaries, and after-tax income, which includes the impact of both government income transfers and direct taxes. Three patterns stand out. First, over 30 per cent of the racial minority population would live in poverty based on their market income alone, and for some minority groups the number approaches 50 per cent. Second, while the tax-transfer system is redistributive and does reduce the incidence of poverty, the poverty rate in after-tax income among racial minorities generally remains almost 21 per cent; and the reduction in poverty as a result of the tax-transfer system is considerably greater for the rest of the population (47.7 per cent) than for the racial minority population as a whole (32 per cent). Third, there are immense differences across racial minorities. Some minorities do comparatively well, but poverty rates among Blacks, Arabs, Koreans and West Asians are much higher.

Table 1 Poverty among Racial Minorities, 2015

Source: Data for low income after tax from Statistics Canada, 2016 Census. Cansim Series 98-400-X2016211. Income data refer to 2015. Data for low income on a market income basis kindly provided by Statistics Canada.

a n.i.e: not included elsewhere.

b Persons who identified with more than one minority group in census.

c Includes persons identifying as Aboriginal.

Many Canadians like to reassure themselves that although immigrants often face a difficult journey to integrate economically, their children—the second generation—have much greater success. Table 2 tracks poverty levels (after taxes and transfers) across generations of racial minorities. Poverty rates are lower among the second generation, markedly so among some groups, such as Chinese- and Japanese-Canadians. Nevertheless, it is the persistence of high poverty levels into the second and even the third-plus generations that stands out, again especially among Blacks, Arabs and West Asians. Poverty among Blacks hardly changes in the second generation and actually nudges upward in the third-plus generations.

Table 2 Poverty among Racial Minorities, by Generation, 2015

Source: Statistics Canada, 2016 Census. Cansim Series 98-400-X2016211. Income data refer to 2015.

Notes: See Table 1 .

These broad patterns are consistent with studies of racial economic inequality that focus on earnings in the labour force. An analysis by Statistics Canada found that, controlling for personal characteristics such as age and education (but not the characteristics of the job), there were large negative gaps—especially for male workers—among some minorities, including Blacks, Chinese, South Asian and other racial minorities (Picot and Hou, Reference Picot and Hou 2011 ; Pendakur and Pendakur, Reference Pendakur and Pendakur 2011 ). Members of racial minorities are also more likely to be unemployed or underemployed in precarious positions with job insecurity, low wages and few employment-based benefits (Galabuzi, Reference Galabuzi 2006 ; Block et al., Reference Block, Galabuzi and Tranjan 2019 ; Ng and Gagnon, Reference Ng and Gagnon 2020 ). Recent studies of the Black population from Statistics Canada also highlight the persistence of racial economic inequality; for example, unemployment rates among the Black population were consistently higher than in the rest of the population between 2001 and 2016, including at higher levels of education (Houle, Reference Houle 2020 ; Statistics Canada, 2020 ). A 2008 study comparing the economic status of Black and white populations in Canada and the United States found that once the relative sizes of different generations of immigrant groups were controlled, racial income and wage gaps in the two countries are strikingly similar (Attewell et al., Reference Attewell, Kasinitz and Dunn 2010 ).

Clearly, racial economic inequality is a significant phenomenon. Yet it does not resonate strongly in policy debates and was not a policy driver in the restructuring of the core policy structures in the 1990s and early 2000s. Why?

3. The Policy Structures

This section demonstrates the marginality of the politics of race and racial economic inequality in the establishment and later restructuring of key policy domains, focusing in turn on the welfare state, immigration, multiculturalism, and anti-discrimination programs.

The welfare state and racial inequality

The postwar welfare state clearly made Canada a fairer, less unequal place, and some Canadians liken their system to the social-democratic model found in Europe. In reality, the Canadian version of the welfare state has always been comparatively modest, reflecting the constrained nature of the commitment to egalitarianism in Canadian liberalism. Social spending as a percentage of GDP is comparatively low, and although the tax-transfer system does reduce inequality more than in the United States, it is not as powerfully redistributive as in much of Europe. Footnote 4

The universalism of Canadian liberalism ensured that racial minorities have been formally incorporated in the welfare state in a “colour-blind” way, with little of the explicit exclusion—or “welfare chauvinism”—practised in some countries (Koning, Reference Koning 2019 ). In general, immigrants admitted as permanent residents are eligible for health care and income benefits on the same terms and conditions as the native born. Most formal restrictions that do exist are temporary; for example, immigrants admitted through the family reunification provisions are often required to rely on their sponsor rather than state assistance for an initial period in the country. The biggest formal access barriers concern pensions. Old Age Security is subject to complicated residency requirements. In addition, immigrants benefit less from the Canada Pension Plan, since its benefits depend on earnings, and many immigrants, especially those from poorer countries, do not have time to build strong contribution records. These barriers—both explicit and implicit—help explain why social programs reduce poverty among racial minorities less than among the rest of the population. Footnote 5

The social architecture inherited from the postwar generation has gone through several cycles of restructuring, including retrenchment in the 1990s and early 2000s, and a more recent cycle of social policy expansion since 2015. As elsewhere, the retrenchment cycle was driven primarily by the politics of globalization and neoliberalism (Mahon and McBride, Reference Mahon and McBride 2008 ). Universal programs, which benefit the middle class, such as pensions and healthcare, were sustained with major injections of new resources. However, programs for unemployed working-age people, such as Employment Insurance and social assistance, were cut significantly (Battle, Reference Battle, Banting, Sharpe and St-Hilaire 2001 ; Kneebone and White, Reference Kneebone and White 2008 ). Tax levels and the progressivity of the tax system were also reduced (Boadway and Cuff, Reference Boadway, Cuff, Banting and Myles 2013 ). A study by the OECD concluded that during the period 1995–2005, redistribution had weakened more in Canada than in any other member country (OECD, 2011 ). Recently, a new cycle of policy change has reversed direction, in response to growing concern about precarious employment and the growth of inequality symbolized by the rise of the top 1 per cent of income earners. The federal Liberal government elected in 2015 strengthened child benefits, Employment Insurance and retirement pensions, while several provincial governments raised minimum wages significantly.

What role, if any, did the politics of race play in either policy cycle? Very little. In the first cycle, racial diversity did not fuel the politics of retrenchment, as in some other countries. In the United States and Europe, many commentators argue that racial diversity erodes a sense of community, weakens feelings of trust in fellow citizens and fragments the historic coalitions that built the welfare state. They argue that members of the majority public withdraw support from social programs that give money to “outsiders” (Alesina and Glaeser, 2004). So far, such corrosive politics have been muted in Canada, at least in relation to immigrant minorities (Soroka et al., Reference Soroka, Johnston, Banting, Kay and Johnston 2006 ). In contrast to the United States, where the rhetoric of “Black welfare queens” was central to anti-welfare backlash, the politics of race did not play a prominent part in welfare retrenchment in Canada.

Instead, discourse during the retrenchment cycle proceeded in a universalist language of generic workers and their families. The dominant paradigm, known as the social investment model, assumed that in the new global economy, governments should not try to protect their citizens through income transfer programs. In the future, individuals’ economic security would depend on their own human capital, and the primary policy goal was to ensure that individuals acquired higher levels of education and training (Banting, Reference Banting, Green and Kesselman 2006 ). There was recognition of the particular challenges facing vulnerable groups, who were normally defined as single parents, recent immigrants, Aboriginal peoples and disabled Canadians. Critically, however, the policy goal was to nudge members of these groups into the paid labour force, and the growing inequality among paid workers was of little interest (OECD, 1994 ; Human Resources Development Canada, 1994 , 2002 ). Moreover, one searches in vain through the major policy documents of the day for any discussion of the implications of retrenchment for racial minorities beyond recent immigrants or for the level of racial economic inequality in the country.

In parallel fashion, the politics of race has not been prominent in recent debates about the growth of inequality. During the 2015 federal election, the policy platforms of all major political parties included some reference to inequality, focusing especially on the middle class. The Liberal party, which won, promised to raise taxes on high-income earners, cut taxes for the middle class and significantly expand child benefits, which help low-income families most. Strikingly, there was virtually no mention of race and racial minorities during the election debates over such proposals. Indeed, there were few references even to “the poor.” Rather, in a detailed nine-page document, the Liberals presented their child benefits proposal as part of a larger package designed to help “the middle-class and those working hard to join it” (Liberal Party of Canada, 2015 : 3). Many racial minority families with children, including recently admitted Syrian refugee families, were beneficiaries when the Liberal government went on to expand the Canada child benefits. However, racial inequality was not part of the larger politics that drove policy expansion. The debate was framed exclusively in universal terms, with an overwhelming concern about families as a general category.

Immigration policy and racial inequality

The transformation of immigration policy in the postwar decades reflects one of the hallmarks of Canadian liberalism. Policy changes in 1962 and 1967 “finally removed all explicit traces of racial discrimination from Canada's immigration laws” (Kelley and Trebilcock, Reference Kelley and Trebilcock 2010 : 357). The 1976 Immigration Act represented the “institutionalization of a universal admissions policy” and the new points system was “intimately linked to the liberalization of Canada's immigrant admission regime” (Triadafilopoulos, Reference Triadafilopoulos 2012 : 14–15). These changes marked a clear break from Mackenzie King's insistence in 1947 that immigration must not change Canada's demographic profile, and demographic change quickly followed. The new system opened the doors to non-European source countries and contributed to the emergence of a more racially diverse Canada.

The new immigration policy was successful for several decades. Immigrants moved relatively quickly into the economic mainstream, and poverty rates among newcomers typically fell below the rate for the population as a whole within a decade or so. However, the economic integration machine began to sputter at the same time the immigration flow was becoming more racially diverse. Beginning in the 1980s, the incomes of new cohorts of immigrants started to decline relative to earlier cohorts, despite often having superior education and skills. The Longitudinal Survey of Immigrants found that only 40 per cent of skilled principal applicants who arrived in 2000–2001 were working in the occupation or profession for which they were trained, and many immigrants with university degrees were working in jobs that typically require high school diplomas or less (Banting et al., Reference Banting, Courchene, Seidle, Banting, Courchene and Seidle 2007 : 658). As Table 3 indicates, between 1980 and 2005, the poverty rate among immigrants was rising at the same time as it was falling among the Canadian-born population.

Table 3 Poverty Rates: Immigrants and Canadian-Born (%)

Source: Garnett Picot, Yuqian Lu and Feng Hou, “Immigrant Low-Income Rates: The Role of Market Income and Government Transfers,” Perspectives , December 2009, Table 1 , Statistics Canada, Catalogue no. 75-001-X. Poverty rates are after taxes and transfers.

Canadian governments focused intensely on the issue. However, they overwhelmingly framed the issue as a problem in the immigration program rather than a product of racial discrimination in the labour market. The dominant interpretation held that larger numbers of racial minorities came to the country in the 1980s and 1990s, just as economic growth in Canada began to slow and unemployment rates rose. New entrants to the labour force—including not only immigrants but also young white Canadians—bore the brunt of these pressures. In the case of immigrants, the situation was compounded by the limitations of newcomers’ language competence and difficulties in evaluating foreign credentials and experience (Alboim and Cohl, Reference Alboim and Cohl 2012 ). Nevertheless, some part of the problem undoubtedly reflected racial discrimination in the labour market. Studies using resume experiments reveal patterns similar to those found in other countries: one study found that English-speaking employers in Toronto, Montreal and Vancouver were about 40 per cent more likely to choose to interview a job-applicant with an English-sounding name than someone with a minority-coded name, even if both candidates had identical education, skills and work histories (Oreopoulos, Reference Oreopoulos 2011 ). Yet in statistical analyses of immigrant economic outcomes, racial discrimination was, at best, referred to as an unmeasured “other” possible factor, often in a footnote. Racial discrimination was also largely absent from immigration debates, and the immigration department had few policy tools to tackle racial inequality.

Instead, policy makers responded by ramping up their existing tools. The federal and provincial governments launched programs to assist employers to assess foreign credentials, expanded language training and introduced work placements to give newcomers domestic work experience (Alboim and Cohl, Reference Alboim and Cohl 2012 ). Even the Conservative government, which was generally committed to reducing public expenditure, dramatically increased federal spending on immigrant integration programs (Seidle, Reference Seidle 2010 ). In time, however, it became clear that fixing the “problem” would require major state intervention in labour markets and even larger public spending on integration programming. Rather than choosing that path, federal governments fell back on traditional levers of immigration policy, shifting from integration to admissions policy, adjusting the rules governing who is admitted to the country. Language testing became much more stringent, the family reunification stream was narrowed further and regulations about who could sponsor a relative were tightened (Smith-Carrier and Mitchell, Reference Smith-Carrier, Mitchell, Béland and Daigneault 2015 ). Most importantly, a pre-existing offer of employment became increasingly important for admission for economic immigrants, implicitly importing existing discrimination in the labour market directly into admissions criteria.

Immigration policy represents a case in which the state took serious action in response to growing inequality experienced by many members of racial minorities. However, governments never framed the problem as one of racial discrimination and economic inequality. They fell back on institutionally embedded ways of thinking about immigration policy and the tool kit available to immigration policy makers.

Multiculturalism policy and racial inequality

Canadians, especially in the anglophone parts of the country, have come to embrace multiculturalism as part of Canadian identity. Yet once again, this policy instrument was never designed to focus directly on issues of racial economic inequality.

The adoption of multiculturalism in 1971 was part of the sweeping liberalization that reshaped so many policies in Canada during the 1960s and 1970s. As in other policy sectors, the original multiculturalism policy of 1971 was introduced for a largely racially homogeneous population. The political pressure to act came from European immigrant groups, such as Ukrainian- and Italian-Canadians, who were already reasonably integrated economically but wanted greater recognition of their culture and contributions in a country dominated by British and French traditions and symbols. The policy was therefore designed to create space for state recognition and accommodation of diversity in state institutions and to give support to help individuals celebrate their cultural affiliations—what Kunz and Sykes ( Reference Kunz and Sykes 2007 ) have termed “ethnicity multiculturalism.”

Since then, multiculturalism policy has evolved in important ways. The arrival of racial minority immigrants in the late 1970s and 1980s broadened the focus. A policy that initially arose as an acknowledgment of long-settled white ethnic groups ‘‘became redefined as a tool for assisting the integration of new non-European immigrants” (Kymlicka, Reference Kymlicka 2005 ). The Multiculturalism Act of 1988 embedded this wider approach, combining the preservation of culture and languages with a newer mandate of reducing racial discrimination. Nevertheless, the consistent thread running through the history of multiculturalism policy has been identity and the equality of cultures rather than the equality of incomes—as Charles Taylor ( Reference Taylor and Gutmann 1994 ) suggests, a politics of recognition. Footnote 6

Canadian multiculturalism policy is embedded in a wide range of government initiatives, including the constitution, school curricula, broadcast mandates, exemptions from some dress codes, dual citizenship and the funding of ethnic organizations. Despite the breadth of the policy, however, most discussion of the strategy refers to the last element: the grants to ethnic organizations, a tiny program that in the 2017–2018 fiscal year was budgeted for grants and contributions totalling $8.5 million—less than a rounding error in the federal budget. Nevertheless, the evolution of the grants program reveals much about the policy (Abu-Laban, Reference Abu-Laban 1998 ; Abu-Laban and Gabriel, Reference Abu-Laban and Gabriel 2002 ). During the 1980s, some funding did go to local initiatives to counter racial discrimination. During the 1990s and 2000s, however, the orientation shifted toward a more explicit focus on integration in response to the failure of the Meech Lake Accord and the prospect of a second Quebec referendum on sovereignty. The 1991 Citizens’ Forum on Canada's Future called for a refocusing of official multiculturalism, with the key goal being “to welcome all Canadians to an evolving mainstream—and thus encourage real respect for diversity” (Canada, 1991 : 129). This integrative push, triggered by the historic tension between English- and French-Canadians, easily displaced the short-lived focus on racial discrimination.

Multiculturalism policies have had important benefits, reducing the cultural costs of integration for immigrants and contributing to a more diverse sense of Canadian identity. However, multiculturalism has left critical racial issues unresolved. As we have seen, it focuses on cultural recognition rather than economic inequality. Even in its own terms, multiculturalism has had limits. Racial minorities remain underrepresented in the senior ranks of the federal public service and the judiciary, where only 30 of the 299 federal judicial appointments made between 2016 and 2020 was a person that identified as a visible minority (Griffith, Reference Griffith 2020 ). There are racial disparities, especially for Black populations, in nearly every aspect of the criminal punishment system, including policing, the courts and incarceration (Chan and Chunn, Reference Chan and Chunn 2014 ). Such exclusion impairs the integration of racial minorities into the Canadian mainstream. The weakness of the commitment to racial discrimination is also counterproductive. The experience of discrimination discourages the sense of attachment to Canada (Hou et al., Reference Hou, Schellenberg and Berry 2016 ; Reitz and Banerjee, Reference Reitz, Banerjee, Banting, Courchene and Seidle 2007 ), and racial minority immigrants participate in every aspect of political life less than do other immigrants (Gidengil and Roy, Reference Gidengil, Roy and Bilodeau 2016 ). In Quebec, where multiculturalism has always had less traction, public debate continues to swirl around the boundaries of “reasonable accommodation” for religious minorities (Bouchard and Taylor, Reference Bouchard and Taylor 2008 ). In 2019, the Coalition Avenir Québec government passed sweeping restrictions on religious dress, a provision that primarily impacts Muslim women. The uprisings following the killing of George Floyd in Minneapolis, which spread to several major Canadian cities in the summer of 2020, also put a spotlight on the prevalence of anti-Black racism in Canadian society.

Multiculturalism lies at the foundation of Canadian national identity. However, the program reflects the historic centrality of ethnicity, culture and language in Canadian politics. As a result, critics worry that the celebration of a multicultural nationalism may convince Canadians that they live in a tolerant society, deflecting attention from the realities of racial economic inequality and the endurance of systemic racism (Thobani, Reference Thobani 2007 ).

The Charter of Rights and Freedoms and anti-discrimination tools

The crowning achievement of postwar liberalism was undoubtedly the entrenchment of Charter of Rights and Freedoms in 1982 and the emergence of human rights commissions at the federal and provincial levels. Section 15(1) of the Charter provides protection to equality rights and the right to “equal protection and equal benefit of the law without discrimination, and in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age, or mental or physical disability.” In addition, Section 15(2) ensures that the Charter does not become a barrier to affirmative action, and Section 27 stipulates that the Charter “shall be interpreted in a manner consistent with the preservation and enhancement of the multicultural heritage of Canadians” (Canada, 1982 ). Armed with the Charter, the courts have provided redress against a number of discriminatory policies, especially against religious minorities (Eliadis, Reference Eliadis 2014 ).

However, the Charter and the wider rights regime have not challenged the economic dimensions of racial inequality. The courts have consistently taken a very guarded approach to the idea of social rights and have declined to interpret the Charter as providing rights to welfare benefits. As a result, its anti-discrimination provisions offer no guarantees of racial equality in economic terms. Human rights commissions at the federal and provincial levels do extend protections against racial discrimination in the private sector in domains such as employment, housing and education. However, the reactive, complaints-based model, focused on retroactive redress for individual human rights violations, is limited in tackling systemic discrimination and racial economic inequality (Sheppard, Reference Sheppard 2010 ).

More relevant is the Employment Equity Act of 1986, which established Canada's version of affirmative action. To avoid the controversy associated with American affirmative action programs, the legislation did not establish quotas or mandate the hiring or promotion of women, persons with disabilities, visible minorities or Aboriginal peoples. The only enforcement mechanism in the 1986 Act was a $50,000 fine that could be levied against employers that failed to submit annual reports to the federal government detailing the representation of these four designated groups in their workforce (Grundy and Smith, Reference Grundy and Smith 2011 ). Technically, the legislation applies only to federally regulated industries, which together employ about 10 per cent of the Canadian workforce. The existence of similar legislation or programs at the provincial level is remarkably uneven, leaving substantial portions of the labour force uncovered (Bakan and Kobayashi, Reference Bakan and Kobayashi 2000 ). The fact that most provinces do not have parallel legislation means that most employers are not covered. This weakness is partially mitigated by the Federal Contractors’ Program, also enacted in 1986, which requires larger employers wishing to bid on federal contracts or receive federal grants to develop employment equity programs designed to identify and eliminate discriminatory barriers. Revisions to the employment equity legislation in 1995 improved compliance provisions by giving the Canadian Human Rights Commission the authority to conduct audits and creating a tribunal to enforce compliance. In 1999, the commission found that many employers set goals that were lower than the labour force availability of the designated groups (Agócs, Reference Agócs 2002 ). While the employment gap between men and women has largely dissipated over the past three decades, employment equity has failed to rectify the underrepresentation of racial minorities, Aboriginal peoples, and persons with disabilities, even within the federal public service (Weiner, Reference Weiner and Agócs 2014 ).

The anti-discriminatory armoury of the Canadian state is impressive, but its individualist and universalist underpinnings hold limited promise for racial economic equality. The most powerful instrument, the Charter, does not directly address economic inequality, and the policy instruments designed to address systematic barriers, such as employment equity legislation, are relatively weak “soft law,” with few powerful enforcement tools. The Employment Equity Act is perhaps the clearest example of policy inertia, as a piece of legislation that was inspired by a clear call to action in the Abella Commission but has had only moderate success more than 35 years after its implementation. As Carol Agócs writes, employment equity had a solid design and rationale in Abella's recommendations, “but there were shortcuts and omissions as the house of employment equity was being built” ( Reference Agócs and Agócs 2014 : 10). As a result, the legislation has not realized its transformative potential.

In sum, these four policy domains were initially constructed by a relatively racially homogenous Canada during the postwar era and institutionalized a liberal universalism, which continues to shape public policy in the more racially diverse Canada of today. Comparing across the fields reinforces the conclusion. Policy domains that wield the most potent policy tools, such as the welfare state and immigration policies, are shaped by the strongest universalist ethos. In comparison, policy domains that, by their very definition, confront racial inequality, such as multiculturalism policies and affirmative action policies, are constrained in one of two ways: either they are not designed to remedy the economic dimensions of inequality, as in the case of multiculturalism policies and the Charter, or when they are expressly designed to challenge economic inequality, they wield comparatively weak policy tools.

4. Conclusion

We began with the image of a puzzle. Why has the Canadian panoply of social policies not made more definitive progress in ending racial economic inequality? Undoubtedly, racial inequality would be even greater if these policies did not exist. In addition, on several dimensions, the Canadian record on the integration of immigrant racial minorities is quite impressive in comparison with other countries. However, progress relating to racial economic inequality and the persistent poverty among several large racial minorities is still embarrassingly limited. Moreover, the persistence of Canadian racial economic inequality is only truly puzzling if we were to assume the robustness of Canada's social model and completely disregard the long and peculiarly Canadian history of state-sanctioned racial discrimination.

Our answer to the puzzle is, at first glance, quite simple. The core social instruments of the Canadian state were never designed to tackle racial inequality directly. The major planks of the policy scaffolding were put in place when Canada was much less racially diverse, and social divisions defined in linguistic, cultural and regional terms loomed larger. More complicated is the question of why Canadian policy instruments have not been re-engineered to respond more directly to the racial inequalities that have now emerged. All the relevant policy fields examined here underwent serious restructuring in recent decades, but racial inequality was a marginal element in the politics of change. No frontal assault on racial economic inequality as such was debated, let alone adopted.

The second part of our answer is an institutionalist story of path dependency and policy inertia. More deeply, it is also a story rooted in the long-term political development of Canada, and the power of institutionalized modes of thinking about social programs and immigration policy. In their inspiration and design, the core postwar programs institutionalized the core assumptions of liberal universalism, and they continue to privilege universalist approaches to welfare, immigration, multicultural and human rights policy in the contemporary era. Together, these institutional and ideational factors have in some instances obscured the realities of racial economic inequality, and in others deflected attention away from problem definitions and concrete actions focusing on race toward more familiar approaches to diversity. While we do not deny that overt racism is an important and often overlooked aspect of the Canadian story, this interpretation provides a supplementary perspective that focuses on the institutional and ideational dynamics of Canadian political development. In fact, in many ways our analysis solidifies the very definition of structural or institutional racism, in that overtly racist intentions are not required in order for prevailing structures and institutional arrangements to leave racial hierarchies unchallenged, preserving the many advantages of white Canadians.

What would be the best way to enhance racial equality in the Canadian context? Given the impressive set of policy tools already in place, what is missing? In part, the best strategy would be to reinvigorate policy tools designed to reduce economic inequality among Canadians generally. Many of the policies introduced since 2015, such as the expansion of child benefits, provide the most help to low-income families—including poor racial minority families. This suggests that proposals framed in terms of helping lower-income Canadians generally will improve the socio-economic status of racial minorities.

However, a general strategy of reducing inequality among all Canadians, on its own, may not be sufficient to address the distinctive factors accentuating racial economic inequality. Policy tools specifically designed to problematize, target and alleviate racial economic inequality also seem needed. A more determined assault on racial discrimination in the labour market is important, as is a more ambitious model of human rights laws across the provinces and territories (Eliadis, Reference Eliadis 2014 : 259–61). Given the limitations of the current model of employment equity, a more aggressive approach toward “positive action” might be more effective. However, any explicitly race-based strategies in Canada must first traverse a political terrain full of landmines for reasons we have already discussed. Canadian liberalism values universalist principles, and in this paradigm, race is considered to be overly divisive. Canadians are not fully comfortable with either the terminology or politics of race.

The racially unequal impact of COVID-19 and the challenge of the Black Lives Matter movement have generated greater awareness of the reality of the many dimensions of racial inequality in Canada. Indeed, the federal government, along with some provinces and municipalities, responded to the uprisings of 2020 with dedicated anti-racism strategies. At this juncture, however, it remains to be seen how much this political climate and these new initiatives will change inherited ways of thinking about and responding to difference. Regardless, at some point in the future, if not now, political parties and governments will have to address issues of racial economic inequality openly and directly. The disconnect between our politics and our lived reality is growing too large to be ignored.

1 Of course, this fails to acknowledge that the presence of some Black Canadians could date back to slavery in British North America, and hence their presence should be considered a legacy of involuntary captivity and not immigration. However, reliable (and continuous) census data and archival records about what happened to this population—whether they stayed in Canada or emigrated elsewhere during the nineteenth and twentieth centuries—are hard to come by.

2 Emmenegger sees discursive institutionalism as a complementary approach to his emphasis on social coalitions (Emmenegger, Reference Emmenegger 2021 ).

3 A parallel gap also exists in the Canadian political science literature (Thompson, Reference Thompson 2008 ; Nath, Reference Nath 2011 ).

4 OECD data on social spending and redistribution are available at https://stats.oecd.org/Index.aspx?DataSetCode=IDD .

5 The problem of informal barriers to effective access to benefits exists in other programs as well. For example, see Halwani ( Reference Halwani 2004 ) for an analysis of the informal sources of racially differentiated treatment in health care. The exclusion of racial minorities from major social programs has been much more thoroughly analyzed in the United States (for example, Katznelson, Reference Katznelson 2006 ).

6 But see also the discussion of recognition and redistribution in Fraser ( Reference Fraser 1995 ).

Figure 1. Number and Proportion of Visible Minority Population in Canada, 1981 to 2036 Sources: Statistics Canada, Census of Population, 1981 to 2006, 2016; National Household Survey, 2011; Immigration and Diversity: Population Projections for Canada and its Regions, 2011 to 2036.

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• Volume 54, Issue 4
• Keith Banting (a1) and Debra Thompson (a2)
• DOI: https://doi.org/10.1017/S0008423921000585

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Chapter 9. Social Inequality

9.1. What Is Social Inequality?

Sociologists use the term social inequality to describe the unequal distribution of valued resources, rewards, and social positions in a society. Key to the concept are the notions of social differentiation and social stratification . The question for sociologists is: how are systems of stratification formed? What is the basis of systematic social inequality in society?

Social differentiation refers to the social characteristics — social differences, identities, and roles — used to differentiate people and divide them into different categories, such as race, gender, age, class, occupation, and education. These social categories have implications for social inequality. Social differentiation by itself does not necessarily imply a division of individuals into a hierarchy of rank, privilege, and power. However, when a social category like class, occupation, gender, or race puts people in a position where they can claim a greater share of resources or rewards, then social differentiation becomes the basis of social inequality.

The term social stratification refers to an institutionalized system of social inequality. It refers to a situation in which social inequality has solidified into an ongoing system that determines and reinforces who gets what, when, and why. Social differentiation based on different characteristics becomes the basis for social inequality.

Students may remember the word “stratification” from geology class. The distinct horizontal layers found in rock, called “strata,” are a good way to visualize social structure. Society’s layers are made of people, and society’s resources are distributed unevenly throughout the layers. The people with the most resources represent the top layer of the social structure of stratification. Other groups of people, with progressively fewer and fewer resources, represent the lower layers of society. Social stratification assigns people to socio-economic strata based on a process of social differentiation — “these type of people go here, and those type of people go there.” The outcome is differences in wealth, income and power. Again, the question for sociologists is how systems of stratification are formed. What is the basis of systematic social inequality in society?

Equality of Condition and Equality of Opportunity

In Canada, the dominant ideological presumption about social inequality is that everyone has an equal chance at success. This is the belief in equality of opportunity , which can be contrasted with the concept of equality of condition . Equality of opportunity is the idea that everyone has an equal possibility of becoming successful. It exists when people have the same chance to pursue economic or social rewards. This is often seen as a function of equal access to education, meritocracy (where individual merit determines social standing), and formal or informal measures to eliminate social discrimination.

Equality of condition is the situation in which everyone in a society has a similar actual level of wealth, status, and power. Although degrees of equality of condition vary markedly in modern societies, it is clear that even the most egalitarian societies today have considerable degrees of inequality of condition. Ultimately, equality of opportunity means that inequalities of condition are not so great that they greatly hamper a person’s opportunities or life chances. Whether Canada is a society characterized by equality of opportunity, or not, is a subject of considerable sociological debate.

To a certain extent, Ted Rogers’ story illustrates the idea of equality of opportunity. His personal narrative is one in which hard work and talent — not inherent privilege, birthright, prejudicial treatment, or societal values — determined his social rank. This emphasis on individual effort is based on the belief that people individually control where they end up in the social hierarchy, which is a key piece in the idea of equality of opportunity. Most people connect inequalities of wealth, status, and power to the individual characteristics of those who succeed or fail. The story of the Aboriginal gang members, although it is also a story of personal choices, casts that belief into doubt. It is clear that the type of choices available to the Aboriginal gang members are of a different range and quality than those available to the Rogers family. The available choices and opportunities are a product of habitus and location within the system of social stratification .

While there are always inequalities between individuals in terms of talent, skill, drive, chance, and so on, sociologists are interested in larger social patterns. Social inequality is not about individual qualities and differences, but about systematic inequalities based on group membership, class, gender, ethnicity, and other variables that structure access to rewards and status. In other words, sociologists are interested in examining the structural conditions of social inequality. There are of course differences in individuals’ abilities and talents that will affect their life chances. The larger question, however, is how inequality becomes systematically structured in economic, social, and political life. In terms of individual ability: Who gets the opportunities to develop their abilities and talents, and who does not? Where does “ability” or “talent” come from? As Canadians live in a society that emphasizes the individual (individual effort, individual morality, individual choice, individual responsibility, individual talent, etc.) it is often difficult to see the way in which life chances are socially structured.

Wealth, Income, Power and Status

Factors that define the layers of stratification vary in different societies. In most modern societies, stratification is indicated by differences in wealth , the net value of money and assets a person has, and income , a person’s wages, salary, or investment dividends. It can also be defined by differences in power (e.g., how many people a person must take orders from versus how many people a person can give orders to, or how many people are affected by one’s orders) and status (the degree of honour or prestige one has in the eyes of others). These four factors create a complex amalgam that defines an individual’s social standing within a hierarchy.

Usually the four factors coincide, as in the case of corporate CEOs, like Ted Rogers, at the top of the hierarchy — wealthy, powerful, and prestigious — and the Aboriginal offenders at the bottom — poor, powerless, and abject. Sociologists use the term status consistency to describe the consistency of an individual’s rank across these factors.

Students can also think of someone like the Canadian Prime Minister — who ranks high in power, but with a salary of approximately $320,000 — earns much less than comparable executives in the private sector (albeit eight times the average Canadian salary). The Prime Minister’s status or prestige also rises and falls with the fluctuations of politics and public opinion. The Nam-Boyd scale of status, based on education and income, ranks politicians (legislators) at 66/100, the same status as cable TV technicians (Boyd, 2008). There is status inconsistency in the prime minister’s position.

Teachers often have high levels of education, which give them high status (92/100 according to the Nam-Boyd scale), but they receive relatively low pay. Many believe that teaching is a noble profession, so teachers should do their jobs for the love of their profession and the good of their students, not for money. Yet no successful executive or entrepreneur would embrace that attitude in the business world, where profits are valued as a driving force. Cultural attitudes and beliefs like these support and perpetuate social inequalities.

Systems of Stratification

Sociologists distinguish between two types of stratification systems. Closed systems accommodate little change in social position. They do not allow people to shift levels and do not permit social relations between levels. Open systems, which are based on achievement, allow movement and interaction between layers and classes. The different systems also produce and foster different cultural values, like the values of loyalty and traditions versus the values of innovation and individualism. The difference in stratification systems can be examined by the comparison between class systems and caste systems.

The Caste System

Caste systems are closed stratification systems in which people can do little or nothing to change their social standing. A caste system is one in which people are born into their social standing and remain in it their whole lives. It is based on fixed or rigid status distinctions, rather than economic classes per se.

As noted above, status is defined by the level of honour or prestige one receives by virtue of membership in a group. Sociologists make a distinction between ascribed status: a status one receives by virtue of being born into a category or group (e.g., caste, hereditary position, gender, race, ethnicity, etc.), and achieved status:   a status one receives through individual effort or merits (e.g., occupation, educational level, moral character, etc.). Caste systems are based on a hierarchy of ascribed statuses, because people are born into fixed caste groups. A person’s occupation and opportunity for education follow from their caste position.

In a caste system, people are assigned roles regardless of their individual talents, interests, or potential. Marriage is endogamous (from endo- ‘within’ and  Greek gamos ‘marriage’) which means marriage between castes is forbidden, whereas exogamous marriage is a marriage union between people from different social groups. There are virtually no opportunities to improve one’s social position. Instead, the relationship between castes is bound by institutionalized rules, and highly ritualistic procedures come into play when people from different castes come into contact. People value traditions and often devote considerable time to perfecting the details of ritualistic procedures.

The feudal systems of Europe and Japan can, in some ways, be seen as caste systems in that the statuses of positions in the social stratification systems were fixed, and there was little or no opportunity for movement through marriage or economic opportunities. In Europe, the feudal estate system divided the population into clergy (first estate), nobility (second estate), and commoners (third estate), which included artisans, merchants, and peasants. In early European feudalism, it was still possible for a peasant or a warrior to achieve a high position in the clergy or nobility, but later the divisions became more rigid. In Japan, between 1603 and 1867, the mibunsei system divided society into five rigid strata in which social standing was inherited. At the top was the Emperor, then court nobles ( kuge ), military commander-in-chief ( shogun ), and land-owning lords ( daimyo ). Beneath them were four classes or castes: the military nobility ( samurai ), peasants, craftsmen, and merchants. The merchants were considered the lowest class because they did not produce anything with their own hands. There was also an outcast or untouchable caste known as the burakumin, who were considered impure or defiled because of their association with death: executioners, undertakers, slaughterhouse workers, tanners, and butchers (Kerbo, 2006).

The caste system in India from 4,000 years ago until the 20th century probably best typifies the system of stratification. In the Hindu caste tradition, people were expected to work in the occupation of their caste and enter into marriage according to their caste. Originally there were four castes: Brahmans (priests), Kshatriyas (military), Vaisyas (merchants), and Sudras (artisans, farmers). There were also the Dalits or Harijans (“untouchables”). Hindu scripture said, “In order to preserve the universe, Brahma (the Supreme) caused the Brahmin to proceed from his mouth, the Kshatriya to proceed from his arm, the Vaishya to proceed from his thigh, and the Shudra to proceed from his foot” (Kashmeri, 1990).

Accepting this social standing was considered a moral duty. Cultural values and economic restrictions reinforced the system. Caste systems promote beliefs in fate, destiny, and the will of a higher power, rather than promoting individual freedom as a value. A person who lives in a caste society is socialized to accept their social standing, and this is reinforced by the society’s dominant norms and values.

Although the caste system in India has been officially dismantled, its residual presence in Indian society is deeply embedded. In rural areas, aspects of the tradition are more likely to remain, while urban centres show less evidence of this past. In India’s larger cities, people now have opportunities to choose their own career paths and marriage partners. As a global centre of employment, corporations have introduced merit-based hiring and employment to the nation. The caste system has been largely replaced by a class system of structured inequality. Nevertheless, Dalits continue to experience violence and discrimination in hiring or obtaining business loans (Jodhka, 2018).

The Class System

A class system is based on both socio-economic factors and individual achievement. It is at least a partially open system. A class consists of a set of people who have the same relationship to the means of production or productive property — that is, to the things used to produce the goods and services needed for survival, such as tools, technologies, resources, land, workplaces, etc. In Karl Marx’s (1848) analysis, class systems form around the institution of private property, dividing those who own or control productive property from those who do not, who survive on the basis of selling their labour. In capitalist societies, for example, the dominant classes are the capitalist class and the working class.

In a class system, social inequality is structural , meaning it is built into the organization of the economy. The relationship to the means of production (i.e., ownership/non-ownership) defines a persistent, objective pattern of social relationships that exists independently of individuals’ personal or voluntary choices and motives.

Unlike caste systems, however, class systems are open in the sense that individuals are able to change class position. Individuals are at least formally free to gain a different level of education or occupation than their parents. They can move up and down within the stratification system. They can also socialize with and marry members of other classes, allowing people to move from one class to another. In other words, individuals can move up and down the class hierarchy, even while the class categories and the class hierarchy itself remain relatively stable. It is not impossible for individuals to pass back and forth between classes through social mobility , but the class structure itself remains intact, structuring people’s lives, privileges, wealth, and social possibilities.

In a class system, one’s occupation is not fixed at birth. Though family background tends to predict where one ends up in the stratification system, personal factors play a role. For example, Ted Rogers Jr. chose a career in media like his father but managed to move upward from a position of modest wealth and privilege in the petite bourgeoisie, to being the fifth-wealthiest bourgeois in the country. On the other hand, his father Ted Sr. chose a career in radio based on individual interests that differed from his own father’s. Ted Sr.’s father, Albert Rogers, held a position as a director of Imperial Oil. Ted Sr. therefore moved downward from the class of the bourgeoisie to the class of the petite bourgeoisie.

Making Connections: Case Study

The commoner who could be queen.

On April 29, 2011, in London, England, Prince William, Duke of Cambridge, married Catherine (“Kate”) Middleton, a commoner. Throughout its history, it has been rare, though not unheard of, for a member of the British royal family to marry a commoner. Kate Middleton had an upper-middle-class upbringing. Her father was a former flight dispatcher, and her mother was a former flight attendant. The family then formed a lucrative mail order business for party accessories. William was the elder son of Charles, Prince of Wales, and Diana, Princess of Wales. Kate and William met when they were both students at the University of St. Andrews in Scotland (Köhler, 2010).

The rules regarding the marriage of royals trace their history to Britain’s formal feudal monarchy, which arose with William of Normandy’s conquest in 1066. Feudal social hierarchy was originally based on landholding. The monarch’s family (royalty) was at the top, vassals, nobles and knights (landholders) below the king, and commoners or serfs on the bottom. This was generally a closed system, with people born into positions of nobility or serfdom. Wealth was passed from generation to generation through primogeniture , a law stating that all property was to be inherited by the firstborn son. If the family had no son, the land went to the next closest male relation. Women could not inherit property, and their social standing was primarily determined through marriage. From the late feudal era onward, a royal marrying a commoner was a scandal. In 1937, the British parliament obliged Edward VIII to abdicate his succession to King of the United Kingdom, so he could marry the American divorcée, Wallis Simpson. Not only was she a commoner, but she was also divorced , which contradicted the Church of England doctrine.

The rise of capitalism changed Britain’s class structure. The feudal commoner class generated both the new dominant class of the bourgeoisie or capitalists and the new subordinate class of the proletariat or wage labourers. The aristocracy and the royals continued as a class through their wealth and property, but their position in society became increasingly based on status and tradition alone. Today, the British government is a constitutional monarchy, with the prime minister and other ministers elected to their positions.  The royal family’s role is largely ceremonial. The historical differences between nobility and commoners have blurred, and the modern class system in Britain is similar to Canada. Since Edward VIII’s abdication in 1937, Queen Elizabeth II’s sister and several of her children and grandchildren have married commoners.

Today, the royal family still commands wealth, power, and a great deal of attention. In 2017, Forbes estimated the total wealth of the royal family to be $88 billion (Rodriguez, 2017). Since Queen Elizabeth II passed away in September 2022, Prince Charles has ascended the throne as king. His wife Camille Parker-Bowles, also a commoner and divorcée, is expected to become “Princess Consort.” If Charles had abdicated (chosen not to become king) or died, the position would go to Prince William. If that happened, Kate Middleton would be called Queen Catherine and hold the position of Queen Consort. She would be one of the few queens in history to have earned a university degree (Marquand, 2011). Of note here is, of course, Prince Harry, who married the commoner and divorcée Meghan Markle. Prince Harry is currently 6th in line for the British throne, after Prince William’s children. If she succeeded to Queen Consort, Meghan Markle would be the first queen with African heritage.

Initially there was a great deal of social pressure on Kate Middleton not only to behave as a royal, but to bear children. The royal family recently changed its succession laws to allow daughters, not just sons, to ascend the throne. Her firstborn son, Prince George, was born on July 22, 2013, so the new succession law is not likely to be tested in the near future. However, behind George is Princess Charlotte (b. 2015) and Prince Louis (b. 2018). Kate’s experience — from commoner to possible queen — demonstrates the fluidity of social class position in modern society.

Social Class

Social class is both obvious and not so obvious in Canadian society. It is based on subjective impressions, outward symbols, and less visible structural determinants. Can one tell a person’s education level based on clothing? Is opening an $80 bottle of wine for dinner normal, an exceptional occasion, or an insane waste of money? Can one guess a person’s income by the car they drive? There was a time in Canada when people’s class was more visibly apparent. In some countries, like the United Kingdom, class differences can still be gauged by differences in schooling, lifestyle, and even accent. In Canada, however, it is harder to determine class from outward appearances.

For sociologists, too, categorizing class is a fluid science. One debate in the discipline is between Marxist and Weberian approaches to social class (Abercrombie & Urry, 1983).

Marx’s analysis emphasizes a historical materialist approach to the underlying structures of the capitalist economy. Classes are historical formations that distribute people into categories based on the organization and structure of the economy. Marx’s definition of social class rests essentially on one materialist variable: a group’s relation to the means of production (ownership or non-ownership of productive property or capital). Therefore, in Marxist class analysis, there are two dominant classes in capitalism — the working class and the owning class — and any divisions within the classes based on occupation, status, education, etc. are less important than the tendency toward increasing separation and polarization of these two classes.

Marx referred to these two classes as the bourgeoisie and the proletariat . The capitalist class (bourgeoisie) lives from the proceeds of owning or controlling productive property (capital assets like factories, technology, software platforms or machinery, or capital itself in the form of investments, stocks, and bonds).  The working class (proletariat) live from selling their labour to the capitalists for a wage or salary.  Their interests are in conflict, as higher profits depend on lower wages, which accounts for the characteristic power dynamics, conflicts, instabilities and periodic crises of capitalist societies.

In addition, he described the classes of the petite bourgeoisie (the little bourgeoisie) and the lumpenproletariat (the sub-proletariat). The petite bourgeoisie are those like small business owners, farmers, and contractors who own some property and perhaps employ a few workers, but still rely on their own labour to survive. The lumpenproletariat are the chronically unemployed or irregularly employed, who are in and out of the workforce. They are what Marx referred to as the “reserve army of labour,” a pool of potential labourers who are surplus to the needs of production at any particular time.

Weber defined social class slightly differently, as the life chances one shares in common with others by virtue of possession of property, goods, skills or opportunities for income (1969). Life chances refer to the ability or probability of an individual to act on opportunities and attain a certain standard of living. Owning property or capital, or not owning property or capital, is still the basic variable that defines a person’s class situation or life chances. However, class position is defined with respect to markets rather than the process of production . It is the value of one’s capital, products or skills in the commodity or labour markets at any particular time that determines whether one has greater or fewer life chances.

This yields a model of class hierarchy based on multiple gradations of socio-economic status, instead of a division between two principle classes. Analyses of class inspired by Weber tend to emphasize gradations of status relating to several variables like wealth, income, education, and occupation. Class stratification is not just determined by a group’s economic position, but by the prestige of the group’s occupation, education level, consumption, and lifestyle. It is a matter of status — the level of honour or prestige one holds in the community by virtue of one’s social position — as much as a matter of class.

Based on the Weberian approach, some sociologists talk about upper, middle, and lower classes (with many subcategories within them) in a way that mixes status categories with class categories. These gradations are often referred to as a group’s socio-economic status ( SES ): their social position relative to others based on income, education, and prestige of occupation . For example, although plumbers might earn more than high school teachers and have greater “life chances” in a particular economy, the status division between blue-collar work (people who “work with their hands”) and white-collar work (people who “work with their minds”) means the plumbers might be characterized as lower class but teachers as middle class.

There is a randomness in the division of classes into upper, middle, and lower in the Weberian model. However, this manner of classification based on status distinctions captures something about the subjective experience of class and the shared lifestyle and consumption patterns of class that Marx’s categories often do not. An NHL hockey player receiving a salary of $6 million a year is a member of the working class, strictly speaking. He might even go on strike or get locked out according to the dynamic of capital and labour conflict described by Marx. Nevertheless, it is difficult to see what the life chances of the hockey player have in common with a landscaper or receptionist, despite the fact that they might share a common working-class background.

Class: Materialist and Interpretive Factors

Social class is a complex category to analyze. It has both a strictly materialist quality relating to a group’s structural position within the economic system, and an interpretive quality relating to the formation of status gradations, common subjective perceptions of class, differences of power in society, and class-based lifestyles and consumption patterns. Considering both the Marxist and Weberian models, social class has at least three objective components: a group’s position in the occupational structure (i.e., the status and salary of one’s job), a group’s position in the power structure (i.e., who has authority over whom), and a group’s position in the property structure (i.e., ownership or non-ownership of capital). It also has an important subjective component that relates to recognitions of status, distinctions of lifestyle, and ultimately how people perceive their place in the class hierarchy.

Making Connections: Classic Sociologists

Marx and weber on social class: how do they differ.

Often, Marx and Weber are perceived as at odds in their approaches to class and social inequality, but it is perhaps better to see them as articulating different styles of analysis.

Weber’s analysis presents a more complex model of the social hierarchy of capitalist society than Marx. Weber’s model goes beyond the economic structural class position to include the variables of status (degree of social prestige or honour) and power (degree of political influence). Thus, Weber provides a multi-dimensional model of social hierarchy. As a result, although individuals might be from the same objective class, their position in the social hierarchy might differ according to their status and political influence. For example, women and men might be equal in terms of their class position, but because of the inequality in the status of the genders within each class, women (as a group) remain lower in the social hierarchy.

With respect to class specifically, Weber also relies on a different definition than Marx. As noted above, Weber (1969) defines class as the “life chances” one shares in common with others by virtue of one’s possession of goods or opportunities for income. Class is defined with respect to markets, rather than the process of production. As in Marx’s analysis, the economic position that stems from owning property and capital, or not owning property and capital, is still the basic variable that defines one’s class situation or life chances. However, as the value of different types of capital or property (e.g., industrial, real estate, financial, etc.), or the value of different types of opportunity for income (i.e., different types of marketable skills), varies according to changes in the commodity or labour markets, Weber can provide a more nuanced description of an individual’s class position than Marx. A skilled tradesman like a pipe welder might enjoy a higher class position and greater life chances in Northern Alberta where such skills are in demand, than a high school teacher in Vancouver or Victoria where the number of qualified teachers exceeds the number of positions available. If one adds the element of status into the picture, the situation becomes even more complex, as the educational requirements and social responsibilities of the high school teacher usually confer more social prestige than the requirements and responsibilities of the pipe welder.

Nevertheless, Weber’s analysis is descriptive rather than analytical . It can provide a useful description of differences between the levels or “strata” in a social hierarchy or stratification system but does not provide an analysis of the formation of classes themselves.

On the other hand, Marx’s analysis of class is essentially one-dimensional. It has one variable: the relationship to the means of production. If one is a professional hockey player, a doctor in a hospital, or a clerk in a supermarket, one works for a wage and is therefore a member of the working class. In this regard, his analysis challenges common sense, as the difference between these different “fragments” of the working class seems paramount — at least from the point of view of the subjective experience of class. It would seem that hockey players, doctors, lawyers, professors, and business executives have very little in common with grocery clerks, factory or agricultural workers, tradespeople, or low level administrative staff, despite the fact that they all depend on being paid wages by someone.

However, the key point of Marx’s analysis is not to ignore the existence of status distinctions within classes, but to examine class structure dialectically in order to provide a more comprehensive and historical picture of class dynamics.

The four components of dialectical analysis were described in Chapter 1. An Introduction to Sociology : (1) Everything in society is related; (2) everything is caught up in a process of change; (3) change proceeds from the quantitative to the qualitative; and (4) change is the product of oppositions and struggles in society. These dialectical qualities are also central to Marx’s account of the hierarchical structure of classes in capitalist society.

With regard to the first point — everything in society is related — the main point of the dialectical analysis of class is that the working class and the owning class have to be understood in a structural relationship to one another. They emerged together out of the old class structure of feudalism. More significantly for Marx, each exists only because the other exists. The wages that define the wage labourer are paid by the capitalist; the profit and capital accumulated by the capitalist are products of the workers’ labour.

In Marx’s dialectical model, “everything is caught up in a process of change” occurs because the system is characterized by the struggle of opposites.  The classes are structurally in conflict because the contradiction in their class interests is built into the economic system. The bourgeoisie as a class is defined by the economic drive to accumulate capital and increase profit. The key means to achieve this in a competitive marketplace is by reducing the cost of production by lowering the cost of labour (by reducing wages, moving production to lower wage areas, or replacing workers with labour-saving technologies). This conflicts with the interests of the proletariat who seek to establish a sustainable standard of living by maintaining their level of wages and employment in society. While individual capitalists and individual workers might not see it this way, structurally, their class interests clash and define a persistent pattern of management-labour conflict and political cleavage in modern, capitalist societies.

So, from the dialectical model, Marx can predict that the composition of classes changes over time: the statuses of different occupations vary, the proportions between workers’ income and capitalists’ profit change, and the types of production and the means of production change (through the introduction of labour-saving technologies, globalization, new products and consumption patterns, etc.). In addition, change proceeds from the quantitative to the qualitative, in the sense that the multiplicity of changes in purely quantitative variables like salary, working conditions, unemployment levels, rates of profitability, product sales, supply and demand, etc., lead to changes in qualitative variables like the subjective experience of inequality and injustice, the political divisions of “left” and “right,” the formation of class-consciousness, and eventually change in the entire economic system through new models of capital accumulation or even revolution.

The strength of Marx’s analysis is its ability to go beyond a description of where different groups fit within the class structure at a given moment in time to an analysis of why those groups and their relative positions change with respect to one another. The dialectical approach reveals the underlying logic of class structure as a dynamic system, and the potential commonality of interests and subjective experiences that define class-consciousness. As a result, in an era in which the precariousness of many high status “middle class” jobs has become clearer, the divisions of economic and political interests between the different segments of the working class becomes less so.

Media Attributions

• Figure 9.3 Office Politics: A Rise to the Top by Alex Proimos, via Flickr, is used under a CC BY-NC 2.0 licence.
• Figure 9.4 Strata in the Badlands by Just a Prairie Boy, via Flickr, is used under a CC BY 2.0 licence.
• Figure 9.5 Fort Mason Neighborhood by Orin Zebest, via Flickr, is used under a CC BY 2.0 licence.
• Figure 9.6  Woman, construction, worker, temple, india, manual, poor, labourer, labour , via PxHere, is used under a CC0 Public Domain licence. 
• Figure 9.7 Royal wedding Kate & William by Gerard Stolk, via Flickr, is used under a CC BY-NC 2.0  licence. 
• Figure 9.8 Item B-03624 – Group of Nanaimo coal miners at the pithead by unknown photographer, [ca. 1870]  (Creation) via the Royal BC Museum/ British Columbia Archives Collection (Item B-03624), is in the public domain .
• Figure 9.9 James and Laura Dunsmuir in Italian Garden at Hatley Park, by unknown photographer, 1912-1920  (Creation), courtesy of Craigdarroch Castle Society,  is in the public domain .
• Figure 9.10 File:MAX WEBER.jpg  by Power Renegadas, via Wikimedia Commons, is used under a CC BY-SA 4.0 licence.
• Figure 9.11   Karl Marx by John Mayall, via Wikimedia Commons, is in the public domain .

Introduction to Sociology – 3rd Canadian Edition Copyright © 2023 by William Little is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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15 Examples of Social Issues in Canada

Canada is the second-largest country in the world by land area. It’s home to over 38 million people, hundreds of languages, and some of the most beautiful natural landscapes. Like every nation, Canada has social issues related to climate change, the rights of marginalized people, gender equality, and healthcare. Here are fifteen examples:

#1. Climate change

In 2020, Canada was the 11th largest greenhouse gas emitter in the world. This represents a decrease from 2005, but Canada still has lots of work to do. It’s the top public financier of fossil fuels among G20 nations. It also consistently approves new oil and gas pipeline expansions and fails to enforce regulations that reduce emissions. According to Climate Action Tracker, the country’s climate goals aren’t enough to meet the Paris Agreement.

#2. Gender inequality

Canada ranks as one of the best countries for women. In 2023, it ranked in 30th place out of 146 countries on the Global Gender Gap Index Rating. Acts like the Canadian Human Rights Act, the Canadian Charter of Rights and Freedoms , and the Pay Equity Act establish the importance of gender equality. There are still gaps to close, however. According to Canadian Women, women still make just 89 cents to every dollar a man makes. In 2020, 10x more women than men left the workforce. Surveys show Canada’s ongoing commitment to gender equality, so the future looks promising.

#3. Immigration policy

Canada has welcomed immigrants for many years. Most people in the country have favorable views of immigrants, and according to a 2022 survey, less than 30% of Canadians thought immigration levels were “too high.” This doesn’t mean Canada does everything right. A 2021 Human Rights Watch report found that thousands of people were being incarcerated on immigration-related grounds. Despite being held for non-criminal reasons, immigrant detainees faced brutal conditions in maximum security jails and solitary confinement. Despite its good reputation regarding immigration, Canada has a lot of work to do.

#4. Indigenous rights

Canada has a long history of colonization and violence against Indigenous people. Reconciliation has been slow. According to an Amnesty International report, Canada has been “significantly failing in its obligations” to Indigenous people. Issues like territorial theft, resource extraction, systemic discrimination, and inequality are persistent. The Amnesty report echoes findings from the UN and other human rights organizations . You can learn more about indigenous rights by taking part in an online course .

#5. Violence against Indigenous women

Canada’s reputation as a safe place for women only applies to certain women. First Nations women and girls with registered or treaty Indian status make up 2-4% of Canada’s female population, but they’re kidnapped and assaulted at disproportionate rates. According to data from Human Rights Watch, 81% of Indigenous women in the child welfare system were physically or sexually assaulted. From 2001-2015, the homicide rate for Indigenous women was almost six times as high as the rate for other Canadian women.

#6. Gender-based violence

Gender-based violence includes physical violence, emotional abuse, stalking, manipulation, and so on. According to Canadian Women, 184 women and girls were killed (mostly by men) in 2022 . Women who’ve experienced gender-based violence are more likely to have depression, anxiety, and other mental health diagnoses. Children who witness violence are also more likely to struggle and experience mental health effects. Dealing with gender-based violence – specifically spousal violence – costs the Canadian government over $7 billion a year. While certain people are at a higher risk of gender-based violence, it can affect anyone.

#7. LGBTQ+ rights

Canada has long been praised as one of the most welcoming countries for the LGBTQ+ community. In 2023, it ranked first on the Equaldex Equality Index. Gay marriage was legalized first in British Columbia and Ontario in 2003, and in 2005, same-sex marriage became legal across Canada. The past decades have seen even more progress regarding anti-discrimination and anti-harassment laws, adoptions, blood donation laws, and more. In 2021, Canada banned conversion therapy , which is any service, treatment, or practice designed to “cure” or suppress a person’s sexual orientation, gender expression, or gender identity . The country still has work to do regarding trans rights, safety, and freedom.

#8. Anti-Black racism

While Canada may have had a smaller role in the Transatlantic Slave Trade compared to other nations, the legacy of slavery and anti-Black racism is still present in the country today. According to statistics, 41% of Black people in Canada experienced discrimination based on their skin color in 2019. Stores, restaurants, and banks were common places of discrimination, while Black respondents also reported discrimination by police. Another study found that Black Canadians in Toronto dealt with “ service deserts ,” which are areas with fewer safe, affordable, and effective healthcare and community services.

#9. Education inequality

Canada’s education system is well-respected around the world. Each of the 13 territories and provinces have their own system, although they must follow government standards. Students aged 6-18 years old must attend school. In recent years, tuition for secondary education has been increasing, especially for international students. There are also stark gender differences in STEM (science, technology, engineering, and mathematics). In 2017, women made up just 26% of new entrants in engineering, manufacturing, and construction, and 20% of the new entrants in information and communication technologies. Unequal government funding for Indigenous students has also been an issue for many years. Canada has been making slow progress on funding gaps.

#10. Water rights

The right to safe water is a human right, but in Canada, Indigenous people have faced persistent violations. Why? The federal government has had jurisdiction over Native lands for centuries. First Nations are owed certain protections, but federal neglect has led to issues with safe drinking water. In 2016, a Human Rights Watch report found that discrimination regarding water is a “legal fact” in Canada. While Canadians living off-reserve have enjoyed safe water, First Nations deal with contamination and long-term boil-water advisories . Solutions, which can include removing colonial-era laws, are urgently needed.

#11. Healthcare

Canada uses a publicly funded healthcare system. Instead of having one national plan, there are 13 territorial and provincial healthcare insurance plans. Through these plans, Canadians get free medically necessary hospital and physician services. This fragmented system has had problems over the years, but the COVID-19 pandemic exacerbated the cracks in the foundation. According to Reuters reporting, Canada’s healthcare system has strained to a “breaking point” with staffing shortages, closed emergency rooms, and increasingly long waiting times. Things won’t improve overnight, so Canada’s healthcare system will likely be a social issue for a long time.

#12. Mental health

In Canada, mental illness affects more than 6.7 million people. It’s a leading cause of disability, suicide, and other health issues. According to the Centre for Addiction and Mental Health, the economic burden of mental illness costs around $51 billion each year . Funding and access are major issues. Just half of Canadians who experience a major depressive episode get “potentially adequate care.” ⅓ of Canadians 15 years and older report a need for mental care, but say their needs weren’t met. 75% of kids with mental disorders can’t access specialized treatment at all. These statistics expose a striking gap between need and care.

#13. Opioid crisis

Opioid addiction and overdoses have been an issue for several years in Canada. In 2016, more than 30,000 people died from opioid-related overdoses, which was more than other major accidental death causes combined. A 2022 NPR article reported that deaths related to fentanyl more than doubled in the past five years. British Columbia has endured the most issues and declared fentanyl a public health crisis in 2016. In 2022, the province instituted a decriminalization policy . Under this policy, possessing small amounts of opioids, cocaine, and methamphetamines remains illegal, but no longer comes with prosecution. Canadian officials hope this shifts focus to healthcare instead of punishment.

#14. Income inequality

Income inequality refers to the gap between those with the highest incomes in society and those with the lowest. Wide gaps lead to a host of issues such as political instability, reduced economic growth, and weakened social cohesion. In Canada, income inequality has been on the rise. According to data, the gap in net worth between the richest and poorest households grew by 1.1 percentage points in the first quarter of 2023. That represents the fastest increase since 2010. The reasons for this increase are complex. Relevant factors include low wages and growing gaps between different types of households, like younger and older households, and immigrants and Canadian citizens.

#15. Housing affordability

Having a place to live is a human right , but when housing becomes expensive, many people struggle to find adequate shelter. Canada is facing a housing crisis. According to a BBC article, the average home in Canada costs C$750,000 in 2023 , which is around £435,000. That’s an increase of 360% from 2000. The cost of houses and rent is especially high in large cities. Young people, who are spending huge chunks of their incomes just on shelter, are changing their life plans because of the crisis. Canada has promised to build 3.5 million homes by 2030 to address the issue, but plans are falling behind. The housing crisis is unlikely to get resolved anytime soon.

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About the author, emmaline soken-huberty.

Emmaline Soken-Huberty is a freelance writer based in Portland, Oregon. She started to become interested in human rights while attending college, eventually getting a concentration in human rights and humanitarianism. LGBTQ+ rights, women’s rights, and climate change are of special concern to her. In her spare time, she can be found reading or enjoying Oregon’s natural beauty with her husband and dog.

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Social Inequality in Canada

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Edited by Monica Mi Hee Hwang, Edward Grabb and Jeffrey G. Reitz

Bringing together twenty-one articles written by experts, Social Inequality in Canada explores the many dimensions of social disadvantage and injustice that exist in this country today. Beginning with a thorough examination of structural inequality issues before moving on to address the wide-ranging impact that social inequality can have, the text presents students with a comprehensive overview of both the persistent patterns of inequality as well as the progress that has been made.

Readership : Social Inequality in Canada is a core text for social inequality and stratification courses offered out of sociology and social work departments at universities and colleges primarily at the second- and third-year levels.

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Towards a Better Understanding of Income Inequality in Canada

In recent years, income inequality has become one of the most animating—and unfortunately most misunderstood—economic and social issues of our time. Sparked by the 2008-09 recession, the well-deserved backlash against corporate bailouts, the Occupy Wall Street movement, and a deluge of reports pointing to a growing problem, income inequality has vaulted to the forefront of the public’s concerns.

Several analyses conclude that income inequality is rising with increasingly larger shares of income being concentrated among the highest earners. Such conclusions depend on the data and assumptions being used to measure inequality. Indeed, many prominent international and Canadian researchers continue to use flawed and incomplete data and research methods to fuel concerns of a growing “income gap” and stagnating standards of living.

This is why we need a better understanding of the true nature of inequality and income growth, including whether inequality is necessarily harmful, how sensitive the inequality measures are to the underlying definitions, whether or not there really is a rapidly growing gap, and the state of income mobility, which is the ability of Canadians to rise out of their respec­tive income group over time. The chapters in Towards a Better Understanding of Income Inequality in Canada tackle these issues and offer a comprehensive analysis of income inequality.

The book begins by pointing out that individuals earn income and accumulate wealth in dramatically different ways. It is essential this fact be taken into consideration in any understanding of the nature of income and wealth inequality. Chapter 1 explains that when measuring inequality, we can’t simply compare countries such as Canada, where typically businesses and entrepreneurs only prosper by benefiting society, to countries where cronyism and government-granted privileges are widespread and rig the system to the benefit of elites. Before determining how much any society should worry about inequality, citizens should first understand that the way income and wealth are earned is critical.

Chapter 2 comes to the conclusion that, when measured properly, income inequality has not been growing rapidly in Canada. When income inequality in Canada is measured improperly, discussions about it are misleading. For example, earnings (wages and salaries) represent a narrow definition of income, yet many researchers use only earnings to measure income inequality, which ignores a number of critical factors including government transfers (welfare, Old Age Security, etc.) to low-income families. This chapter also addresses the question of who should be measured—individuals or families and concludes that the most accurate measurement for income inequality is after-tax income (which includes government transfers) adjusted for family size.

Chapter 3 finds that inequality in the standard of living of Canadians (consumption inequality, or the difference in spending by different households) has barely changed in 40 years. Consumption—compared to income—better reflects Canadians’ actual economic well-being by measuring what people do buy to support a certain standard of living, and not what people could buy, based on their income.

Chapter 4 points out that wealth inequality in Canada is largely the result of people’s age differences. Wealth accumulation is a process. It happens slowly and steadily over a long period. Canadians usually acquire the most wealth when they hit their peak earning years—between 55 and 69—just before retirement. When they retire, they start to draw down savings and, in effect, become less wealthy again. What’s more, wealth inequality in Canada has actually declined over the past four decades.

Just as wealth is accumulated over the course of decades, so too is the level of income that Canadians earn each year. Chapter 5 explains that Canada’s high level of income mobility means that very few Canadians remain stuck in low income. The vast majority of those in the lowest income group move up the income ladder over time, which is the mark of a dynamic economy.

A repeated claim in the inequality debate is that the middle class in Canada is stagnating. But this is untrue. Chapter 6 demonstrates that middle-class incomes are up dramatically in Canada since the 1970s. Not only have middle-class incomes risen dramatically, the purchasing power of those incomes goes a lot further today than back in the 1970s. Canadians have to work fewer hours today in order to afford similar and often higher quality household goods.

So much of the debate around income inequality revolves around perceptions of fairness. The book’s final chapter discusses the proposition that inequality could be solved if governments increased taxes on upper income earners. This “solution” is based, in part, on a mistaken impression that the country’s top earners are paying relatively little tax. Governments have fuelled this misperception by invoking “tax fairness” to justify higher taxes on upper earners. Canada’s top income earners currently pay a disproportionate share of taxes relative to the share of income that they earn and that tax ratio gap has been increasing over time. The imbalance is primarily due to the progressivity of Canada’s personal income tax system, which taxes higher levels of income at higher marginal tax rates. Those who advocate higher taxes on top income earners are, in effect, arguing that those earners should be paying an even more disproportionate share of taxes.

Taxes cannot be continually raised on top income earners without economic consequences. Higher tax rates would further erode Canada’s tax competitiveness, discourage economically productive activity, hinder the country’s ability to attract and retain top talent, and dampen the incentives for income mobility. Once that happens, everyone is hurt, particularly those, ironically enough, whom the misguided policies are intended to help.

Income inequality is a complex issue. The good news is that the problem of inequality isn’t nearly as bad as people are sometimes led to believe. Canadians have less inequality than they might think, and are more able, thanks to opportunities of mobility, to get out of a low-income situation than they might fear. Middle-class incomes in this country are not stagnating, and most people can and do build wealth over the course of their lives. The bad news is that policies designed to address inequality might be doing more harm than good—exacerbating the situation and making it worse, not better.

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Edited by David A. Green, W. Craig Riddell and France St-Hilaire The Institute for Research on Public Policy, in collaboration with the Canadian Labour Market and Skills Researcher Network, has gathered some of the country’s leading experts to provide new evidence on the causes and effects of growing income inequality in Canada and the role of policy. Their research and analysis is collected in this volume, the fifth in the IRPP’s The Art of the State series. To purchase a copy, please visit the IRPP store . Some chapters are available online.

Introduction

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• 11F0019M, no. 364 Published December 2014

Immigration, Low Income and Income Inequality in Canada: What's New in the 2000s?

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by Garnett Picot and Feng Hou Social Analysis and Modelling Division, Statistics Canada

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Executive summary

1 introduction, 2 immigration and low-income rates in canada, 3 immigration and high-income rates in canada, 4 immigration and family-income inequality, 5 immigration and family-earnings inequality, 6 the indirect effect of immigration on wage inequality, 7 conclusion, appendix a: tables, appendix b: decomposing the squared coefficient of variation, theil and mean log deviation indexes.

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This paper documents changes in low-income and high-income rates and in family-income inequality among immigrants and Canadian-born persons over the 1995-to-2010 period. In addition, it estimates the extent to which declining low-income rates among immigrants were attributable to changing compositional characteristics over this period, and the direct role that immigration played in low-income and income-inequality trends in Canada. Both national and regional results are presented. There are four major findings. First, in contrast to the 1980s and 1990s, immigrant low-income rates declined in the 2000s. The decline was particularly evident in the western regions, but was not observed in Toronto. However, because low-income rates also declined among the Canadian-born through the 2000s, immigrants’ low-income rates relative to the Canadian-born remained high in most regions. Manitoba and Saskatchewan were exceptions in this regard. Second, changes in immigrant characteristics and selection programs accounted for about one-third of the decline in low-income rates among recent immigrants. Again, this varied by region. Third, while rising immigrant low-income rates accounted for virtually all of the increase in the national low-income rate over the 1980s and 1990s, immigrants accounted for little of the decline in the national low-income rate during the 2000s. Immigrants also accounted for little of the rise in the high-income rate observed between 1995 and 2010. Fourth, immigration contributed very little to national trends in either family-income inequality or family-earnings inequality since the mid-1990s.

During the 1980s and 1990s, immigration was associated with the rise in low-income rates and family-income inequality in Canada. Over the 2000s, there were significant changes in the labour market and in immigrant selection. This paper focuses on the direct effect of immigration on the change in low income and family-income inequality over the 1995-to-2010 period. The paper outlines recent trends in low-income rates and income inequality for both the Canadian-born and immigrants. The low-income rate in Canada fell during the 2000s. Was this driven in part by changes in economic outcomes among immigrants? Inequality increased considerably in the late 1990s. Did immigration contribute to this increase?

This paper uses Statistics Canada’s Longitudinal Administrative Databank (LAD) as the primary data source. The LAD is a random, 20% sample of the T1 Family File, which is a yearly cross-sectional file of all taxfilers and their families. Immigrants who have entered Canada since 1980 can be identified in this file. Furthermore, information based on immigrant landing records, such as education at entry, age at entry, intended occupation, gender, family status, whether the immigrant speaks English or French at entry, and immigrant class are included in the LAD file for immigrants. All immigrants who filed a return at any time during their tenure in Canada are included in the study sample. The low-income status in this study is based on a fixed low-income measure, defined as the average of one-half of the median adult-equivalent adjusted family incomes in 1995, 2000, 2005 and 2010. The income in each year is reported in 2010 constant dollars, i.e., is adjusted for inflation over the 1995-to-2010 period.

Low-income rates among immigrants declined significantly over the 2000s, although their relative (to the Canadian-born) low-income rates did not improve. There were three regional exceptions to this general pattern: immigrant low-income rates did not fall in Toronto as in other regions during the 2000s; low-income rates did not fall among the Canadian-born in Toronto as in other regions during the 2000s; and rates among immigrants decreased the fastest in Manitoba and Saskatchewan, where relativerates among recent immigrants fell back to around 1.2 times those of the Canadian-born, levels of relative rates not seen since the early 1980s.

At the national level, changes in immigrant characteristics—notably rising educational attainment and changing source regions—accounted for about one-third of the decline in the low-income rate among recent immigrants (in Canada five years or less) during the 2000s. The effect of compositional changes differed across regions. Changes in immigrant characteristics and entry programs accounted for between one-fifth and one-half of the decrease in low-income rates among recent immigrants, depending on the region.

Declining immigrant low-income rates contributed little to the fall in low-income rates among the general population in Canada during the 2000s. Unlike the 1990s, when rising immigrant population shares and low-income rates accounted for most of the increase in low-income rates in Canada, the decrease in the rates during the 2000s was driven primarily by falling rates among the Canadian-born.

High-income rates rose between 1995 and 2010 among both immigrants and the Canadian-born, although they were higher among the latter group. Immigration contributed little to the increase in the overall high-income rate in Canada over that period.

Both family-income inequality and family-earnings inequality increased in Canada from 1990 to 2010, but the majority of the rise occurred during the late 1990s. The paper concludes that for Canada as a whole, immigration contributed little to the increase of the late 1990s in either income or earnings inequality. Family income and earnings inequality rose among the immigrant population during the late 1990s, as it did among the Canadian-born, but the immigrant population did not contribute disproportionately to the overall increase. There was little increase in income inequality in the 2000s.

During the 1980s and 1990s, immigration had a significant negative effect on low-income rates and family-income inequality in Canada. The rise in immigration levels during that period were accompanied by concerns about immigrants’ declining economic outcomes. While low-income rates among the Canadian-born fell through the 1990s, they rose among immigrants. As a result, rising immigrant low-income rates accounted for virtually all of the increase in the national low-income rate during that period (Picot and Hou 2003). Immigration had an effect on family-income inequality as well. One study found that as much as one-half of the small rise in inequality during the early 1990s was associated with the immigrant population (Moore and Pacey 2003). The effect was most pronounced in the large cities where the immigrant population grew most. The preceding papers were concerned with the effect of immigration on the low income and inequality of the total Canadian population (immigrants plus the Canadian-born) due to rising shares of immigrants and their worsening economic outcomes. In this paper, this is referred to as the direct effect of immigration on low income and family-income inequality.

There is another body of literature that focuses on the effect of immigration on the wages and the wage distribution of domestically-born workers (in our case the Canadian-born) . Rising shares of immigrants in the Canadian population can potentially affect the wages of the Canadian-born. This can affect low-income rates, as earnings are the largest component of income for most families. It can also influence wage inequality among the Canadian-born. In this paper, this is referred to as the indirect effect of immigration on low income and inequality. The international literature on this topic is quite extensive, but only a small number of Canadian papers exist. The international literature tends to find that immigration has only a very small effect on the wages of domestic workers, whether positive or negative (Longhi, Nijkamp and Poot 2009;  European Economic Association 2012; Card 2009).

In this context, it seems likely that the indirect effect of immigration on low income or family-income inequality among the Canadian-born population would be quite small. However, the direct effect of a rising share of immigrants in the population, combined with relatively poor economic outcomes of many recent immigrants, can significantly affect low-income and inequality levels for the total population in Canada. In the United States, Card (2009) found that immigration had little effect on wage inequality among the American-born (i.e., the indirect effect), while the direct effect on inequality was larger, although still not dramatic. This direct effect would be most pronounced in cities and regions where immigrants constitute a large share of the population.

This paper briefly discusses the indirect effect of immigration and examines in detail the direct effect of immigration on the change in low income and family-income inequality over the 1995-to-2010 period. Recent trends in low-income rates and income inequality for both the Canadian-born and immigrants are outlined: the Canadian low-income rate fell during the 2000s, and whether this was driven in part by changes in economic outcomes of immigrants is explored. The rise in Canadian income inequality was concentrated in the late 1990s, and this paper looks at whether immigration contributed to this increase. The two preceding questions are the central focus of this paper, with results produced at the national and provincial levels and for major metropolitan areas.

The primary data source used in this study is Statistics Canada’s Longitudinal Administrative Databank (LAD). The LAD is a random, 20% sample of the T1 Family File, which is a yearly cross-sectional file of all taxfilers and their families. Individuals selected for the LAD are linked across years to create a longitudinal profile of each individual. Since the early 1990s, approximately 95% of working-age Canadians filed tax returns. Immigrants who have entered Canada since 1980 can be identified in this file. Furthermore, information based on immigrant landing records, such as education at entry, age at entry, intended occupation, gender, family status, whether the immigrant speaks English or French at entry, and immigrant class are included in the LAD file for immigrants. All immigrants who filed a return at any time during their tenure in Canada are included in the sample.

2.1 Low-income trends in Canada

This paper is concerned with trends, and in particular the change in the low-income rate between 1995 and 2010. Low-income rates are very cyclically sensitive, rising in recessions and falling in expansions. To assess longer-term trends—abstracting from cyclical variation—focus is put on the years of 1981, 1989, 2000 and 2007. The low-income rate most commonly reported by Statistics Canada Note  1 fell during the 1980s, from 11.6% in 1981 to 10.2% in 1989 (Chart 1). Over the 1990s the low-income rate rose marginally, reaching 12.5% by 2000. A significant decline followed during the 2000s, as the rate fell to 9.1% in 2007. The low-income rate rose marginally during the 2008-to-2009 recession and fell again to 8.8% by 2011. It is conceivable that improvements in the low-income rate among immigrants contributed to the falling low-income rate in Canada during the 2000s.

Description for chart 1

The trends in low-income rates in Canada can differ depending on the data source, definition of income, and low-income cut-offs that are used. The trends based on the Longitudinal Administrative Databank (LAD) are similar to those reported above from the survey data, although the levels are quite different for a number of reasons Note  2 (Table 1). The administrative data suggest that the low-income rate fell by about one-third between 1995 and 2010, while the survey data suggest a 39% drop. Some of this decline would be due to business cycle effects, notably the improvement in the economy between 1995 and 2000. Both the administrative and the survey data show that about one-third of the overall decline between 1995 and 2010 occurred during the expansion of the late 1990s. This is likely the normal decline in low-income rates observed over the last part of a business cycle. But the decline in the low-income rate during the 2000s is likely due at least in part to other factors, possibly including declining immigrant low-income rates.

2.2 Trends in immigrant low-income rates

Using census data, before-tax income, and the low-income cut-offs (LICOs), Picot and Hou (2003) found that both absolute and relative (to the Canadian-born) low-income rates among immigrants rose through the 1980s and 1990s (abstracting from business cycle fluctuations). This increase was observed not only among recent immigrants (those in Canada for less than five years), but also among immigrants in Canada for 6 to 10 and 11 to 15 years. Indeed, low-income rates increased by roughly 50% among each of these groups. This was evident across all education, age and language groups, but was concentrated primarily among immigrants from Asia, Africa and Southern and Eastern Europe. The trends among immigrants in Canada for more than 15 years closely resembled those observed among the Canadian-born population. In relative terms, low-income rates among recent immigrants increased from 1.4 to 2.5 times that of the Canadian-born population between 1980 and 2000 (Chart 2).

Description for chart 2

Since 1995, low-income rates among immigrants and the total population have been declining. Among recent immigrants, the after-tax low-income rates using a fixed low-income measure (LIM) Note  3 fell from 45.7% to 31.9% between 1995 and 2010, a decline of one-third (Table 2). But, as noted above, there was a substantial decline in the low-income rate among the total population over this period. The comparison group Note  4 used in this study, consisting mainly of the Canadian-born, also saw its low-income rate fall by roughly one-third, from 18.6% to 12.5%. Hence, there was little change in the relative low-income ratio among recent immigrants, which remained about 2.6 times that of the Canadian-born in 2010 (Chart 3). The rate for the comparison group (largely Canadian-born) acts as a control for business cycle and policy changes that can affect the low-income rate of all groups. Over the study period, the income distribution shifted significantly to the right for all these groups, although recent immigrants were more likely to locate at the bottom of the income distribution than other groups in both 2000 and 2010 (Charts A.1 and A.2, Appendix A).

Description for chart 3

Over the 1995-to-2010 period, declines in the absolute low-income rates of immigrants in Canada for 6 to 10 years and 11 to 15 years were also observed (23% and 12% declines respectively) (Chart 2), although the relative low-income ratios of these groups rose marginally (Chart 3).

Since both immigrant shares of the population and economic outcomes differ across regions, the low-income trend data are provided for the regions of Canada as well as the larger cities in Appendix Table A.1. The trends in low-income rates in most regions generally reflect those reported at the national level above. That is to say, absolute rates fell somewhat over the 2000s, but relative rates remained more or less stable, particularly for recent immigrants. However, there are a few exceptions to this observation. In Toronto, low-income rates did not decline significantly among immigrants during the 2000s, and did not fall among the Canadian-born (i.e., the comparison group). Toronto was the only region/city that did not experience an improvement in low-income rates among immigrants or the Canadian-born during that decade.

The other major exceptions were Manitoba and Saskatchewan. Through the 2000s, they experienced significant increases in the number of immigrants admitted through the Provincial Nominee Program. The share of the population consisting of recent immigrants doubled in both provinces (Table A.1), although remaining well below that observed in Montreal, Toronto and Vancouver. These two provinces also experienced the most rapid decline in low-income rates among immigrants over the 2000s, and were the only two regions where recent immigrants’ relative (to the Canadian-born) low-income rates fell significantly. In Manitoba, low-income rates among recent immigrants declined by 40% over the 2000s to 16.3%, well below rates in most other regions (Table A.1). The rate fell by 50% in Saskatchewan. In both provinces, the relative low-income ratios fell back to around 1.2, levels not seen in Canada since the early 1980s. In Alberta and British Columbia, the low-income rates among immigrants declined significantly during the 2000s, but the relative rates remained in the 1.9 to 2.4 range by 2010, suggesting no real improvement beyond what was observed for the population as a whole, and well above relative levels observed in earlier decades.

2.3 Did the rates among recent immigrants decline because of changing programs and immigrant characteristics?

The immigrant selection system changed significantly over the 2000s. The Immigration and Refugee Protection Act introduced in 2002 altered the points system used to select federal skilled workers. As a result, the educational attainment of new immigrants increased, their “intended” occupational distribution moved somewhat away from engineers and information technology workers towards other occupations, their language skills improved, and the distribution of source regions shifted substantially. These changes in composition tended to increase the average earnings of federal skilled-worker principal applicants entering the country after 2004 (CIC 2010).

The other major compositional shift was the expansion of the Provincial Nominee Program (PNP), particularly in Manitoba and Saskatchewan. Employers play a larger role in selection in this program than in the Federal Skilled Worker Program (FSWP); hence more immigrants entered Canada with a job in place. The result was that during the first few years after entering Canada, PNP immigrants had, on average, higher earnings than those entering under the FSWP. However, federal skilled workers’ earnings surpassed those in the PNP after about five years, likely due to their higher educational attainment levels (CIC 2011).

The statistics on recent immigrants reflect the compositional shifts outlined above. Between 2000 and 2010, the proportion with a university degree increased from 31% to 42%, and, among recent immigrants whose mother tongue was not English, the share able to speak English increased from 48% to 59%. Note  5 Nationally, the proportion entering through the PNP increased from virtually zero in 2000 to 7% in 2010. This effect was strongest in Manitoba and Saskatchewan, where the shares entering via the PNP rose from 4% to 66% and from 0% to 49%, respectively.

The compositional shifts in immigrant characteristics and programs of entry may have been partly responsible for the decline in low-income rates over the 2000s, particularly among recent immigrants (in Canada for less than five years), the group on which this section focuses.

With a regression decomposition approach, Note  6 the extent to which the decline in the low-income rate was associated with changes in characteristics can be assessed—notably age, educational attainment, source region, knowledge of an official language and family status—or changes in the share entering the country under various programs Note  7 —including the PNP and FSWP, and as family class and refugees. The decomposition is carried out for Canada and its regions and cities, and for two time periods—1995 to 2000 and 2000 to 2010. This paper focuses on the latter period, Note  8 but briefly reports the results for 1995 to 2000.

During the economic expansion that occurred between 1995 and 2000, low-income rates among recent immigrants in Canada fell by 6.3 percentage points. The changing composition of recent immigrants contributed 1.9 points (or about 30%) of the decline. Changing education, age and family composition were the main factors underlying this composition effect (Table 2). During the 2000-to-2010 period particularly, of the 7.5-percentage-point decline in the low-income rate among recent immigrants in Canada, one-third (or 2.5 points) was associated with the changing composition of recent immigrants (Table 2). Rising educational attainment and changing source regions were the major contributors to the composition effect, together accounting for 1.7 of the 2.5-percentage-point drop associated with the compositional shift. Changing admission class did not have a large effect, accounting for only roughly 3% (0.2/7.5, Table 2) and at most 13% Note  9 of the total decline at the national level.

Changes in immigration selection varied by province during the 2000s, as these jurisdictions played a more active policy role than during previous periods. Some provinces embraced the PNP, others did not. Furthermore, immigrant landings moved somewhat away from Toronto and Vancouver towards other regions (Bonikowska, Hou and Picot 2014). As a result, changes in composition and immigrant class varied by region, as did their effect on low-income rates. Compositional changes accounted for between one-fifth and one-half of the decrease in low-income rates in the regions and cities, and the specific factors responsible for these compositional affects varied among jurisdictions.

In that regard, the three large cities remained the destination for most recent immigrants. In Toronto, low-income rates among recent immigrants did not fall over the 2000s. However, Montreal experienced a significant decline of 9.6 percentage points, half of which was associated with compositional changes. The most significant contributing factors included rising educational attainment levels and changes in admissions programs (Table 2), notably an increasing share of immigrants admitted via the FSWP, which increased from 39% to 57%. Furthermore, Vancouver saw a substantial 12.4-percentage-point drop in the low-income rates of recent immigrants, but only about 10% of it (1.2 points) was associated with compositional changes. In Vancouver, the share of immigrants entering through the federal skilled worker class fell from one-half to one-third and the shares entering through the family class and PNP rose. This shift in admission classes tended to put upward pressure on the low-income rate. However, this was offset by shifts in source region and rising educational attainment, which put downward pressure on the rate (Table 2). Overall, across the three largest immigrant-receiving cities, the effect of compositional changes on low-income rates varied significantly.

This variability was also evident across regions that saw larger immigrant in-flows through the 2000s. Saskatchewan posted the largest decline in low-income rates among recent immigrants (16.5 percentage points). About one-third of this appears to be associated with changing immigrant composition, driven primarily by shifts in source regions. Results for Manitoba are unclear because of the unusually large 'joint change,' which makes it impossible to separate the effects of changing admission categories from other factors. Note  10 Alberta and the Atlantic region also registered declines in low-income rates among recent immigrants. Compositional changes accounted for almost one-half of the decline in the Atlantic region, driven mainly by changes in admission class and source region, and for about one-third in Alberta, driven mainly by changes in admission class and rising educational attainment.

In summary, compositional changes—including changes in admission class and characteristics—did not play the dominant role in the decline in the low-income rates among recent immigrants over the 2000-to-2010 period, but played a significant part. The specific factors driving the compositional effect varied by region.

However, the decline in immigrant low-income rates may have contributed to the fall in the Canadian rates during the 2000s, just as they accounted for much of the rise in the 1990s.

2.4 The contribution of immigration to the decline in low-income rates in Canada during the 2000s

The direct effect of immigration on the aggregate low-income rate can be driven by two factors: a change in the share of immigrants in the population, and a change in their low-income rate. To determine a group’s contribution to the change in the aggregate low-income rate in Canada or in a region, the following formula is used:

%       c o n t r i b u t i o n = [ r i ,   y 2 * S i ,   y 2 − r i ,   y 1 * S i ,   y 1 ]   * 100 / [ R y 2 − R y 1 ] MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaai yjaiaayIW7caaMi8UaaGjcVlaadogacaWGVbGaamOBaiaadshacaWG YbGaamyAaiaadkgacaWG1bGaamiDaiaadMgacaWGVbGaamOBaiabg2 da9maadmaabaGaamOCamaaBaaaleaacaWGPbGaaiilaiaayIW7caWG 5bGaaGOmaaqabaGccaGGQaGaam4uamaaBaaaleaacaWGPbGaaiilai aayIW7caWG5bGaaGOmaaqabaGccqGHsislcaWGYbWaaSbaaSqaaiaa dMgacaGGSaGaaGjcVlaadMhacaaIXaaabeaakiaacQcacaWGtbWaaS baaSqaaiaadMgacaGGSaGaaGjcVlaadMhacaaIXaaabeaaaOGaay5w aiaaw2faaiaayIW7caGGQaGaaGymaiaaicdacaaIWaGaai4lamaadm aabaGaamOuamaaBaaaleaacaWG5bGaaGOmaaqabaGccqGHsislcaWG sbWaaSbaaSqaaiaadMhacaaIXaaabeaaaOGaay5waiaaw2faaaaa@73AF@

where r i ,   y 1 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaam OCamaaBaaaleaacaWGPbGaaiilaiaayIW7caWG5bGaaGymaaqabaaa aa@3E1D@  and r i ,   y 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaam OCamaaBaaaleaacaWGPbGaaiilaiaayIW7caWG5bGaaGOmaaqabaaa aa@3E1E@  are the low-income rates for immigrant group i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@  in year 1 and year 2, S i ,   y 1 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaam 4uamaaBaaaleaacaWGPbGaaiilaiaayIW7caWG5bGaaGymaaqabaaa aa@3DFE@  and S i ,   y 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaam 4uamaaBaaaleaacaWGPbGaaiilaiaayIW7caWG5bGaaGOmaaqabaaa aa@3DFF@  are immigrant group i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@ ’s shares of the population in the corresponding years, and R y 1 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaam OuamaaBaaaleaacaWG5bGaaGymaaqabaaaaa@3ACE@  and R y 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaam OuamaaBaaaleaacaWG5bGaaGOmaaqabaaaaa@3ACF@  are the low-income rates for the population as a whole in year 1 and year 2.

The contribution of each group can be further decomposed into three components, namely: (1) the change in the group’s low-income rates, S i , y 1 * [ r i , y 2 – r i , y 1 ] * 1 0 0 / [ R y 2 – R y 1 ] MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa83uamaaBaaaleaacaWFPbGaa8hlaiaa=LhaieaacaGFXaaabeaa kiaa=PcadaWadaqaaiaa=jhadaWgaaWcbaGaa8xAaiaa=XcacaWF5b Gaa4Nmaiaa=bcaaeqaaOGaa83eGiaa=bcacaWFYbWaaSbaaSqaaiaa =LgacaWFSaGaa8xEaiaa+fdaaeqaaaGccaGLBbGaayzxaaGaa8Nkai aa+fdacaGFWaGaa4hmaiaa=9cacaWFGaWaamWaaeaacaWFsbWaaSba aSqaaiaa=LhacaGFYaaabeaakiaa=bcacaWFtaIaa8hiaiaa=jfada WgaaWcbaGaa8xEaiaa+fdaaeqaaaGccaGLBbGaayzxaaaaaa@5739@ ; (2) the change in the group’s population share, r i , y 1 * [ S i ,   y 2 –     S i , y 1 ] * 1 0 0 / [ R y 2 – R y 1 ] MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8NCamaaBaaaleaacaWFPbGaa8hlaiaa=bcacaWF5bacbaGaa4xm aaqabaGccaWFQaWaamWaaeaacaWFtbWaaSbaaSqaaiaa=LgacaWFSa GaaGjcVlaa=LhacaGFYaGaa8hiaaqabaGccaWFtaIaaGPaVlaaykW7 caWFtbWaaSbaaSqaaiaa=LgacaWFSaGaa8hiaiaa=LhacaGFXaaabe aaaOGaay5waiaaw2faaiaa=PcacaGFXaGaa4hmaiaa+bdacaWFVaGa a8hiamaadmaabaGaa8NuamaaBaaaleaacaWF5bGaa4NmaaqabaGcca WFGaGaa83eGiaa=bcacaWFsbWaaSbaaSqaaiaa=LhacaGFXaaabeaa aOGaay5waiaaw2faaaaa@5C62@ ; (3) and the joint change in the group’s low-income rates and population share [ S i , y 2 –     S i , y 1 ] * [ r i , y 2 – r i , y 1 ] * 1 0 0 / [ R y 2 – R y 1 ] MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaWaam WaaeaaieGacaWFtbWaaSbaaSqaaiaa=LgacaWFSaGaa8hiaiaa=Lha ieaacaGFYaGaa8hiaaqabaGccaWFtaIaaGPaVlaaykW7caWFtbWaaS baaSqaaiaa=LgacaWFSaGaa8xEaiaa+fdaaeqaaaGccaGLBbGaayzx aaGaa8NkamaadmaabaGaa8NCamaaBaaaleaacaWFPbGaa8hlaiaa=b cacaWF5bGaa4Nmaiaa=bcaaeqaaOGaa83eGiaa=bcacaWFYbWaaSba aSqaaiaa=LgacaWFSaGaa8hiaiaa=LhacaGFXaaabeaaaOGaay5wai aaw2faaiaa=PcacaGFXaGaa4hmaiaa+bdacaWFVaGaa8hiamaadmaa baGaa8NuamaaBaaaleaacaWF5bGaa4NmaaqabaGccaWFGaGaa83eGi aa=bcacaWFsbWaaSbaaSqaaiaa=LhacaGFXaaabeaaaOGaay5waiaa w2faaaaa@63C6@ .

2.4.1 The effect of recent immigration on low-income rates

The low-income rates of recent immigrants are typically much higher than those of the Canadian-born, and hence a change in their population share can alter the overall rate. For that reason, the focus here is on recent immigrants.

The share of recent immigrants in the national population rose marginally through the 2000s, from 2.9% to 3.3%. However, there was considerable variability across regions and cities, with shares decreasing in Toronto and Vancouver but rising in Manitoba, Saskatchewan and Alberta (Table A.1).

At the national level, recent immigrants contributed very little to the overall decline in the low-income rate between 2000 and 2010, accounting for only 2% (Table A.2). Indeed, it was only in Vancouver that recent immigration played a significant role in the decline in low-income, accounting for about one-half of the 3.5-percentage-point decrease observed in that city. This effect was due to both declining low-income rates among recent immigrants and a decline in their share of the city’s population. Interestingly, countervailing trends were evident in Manitoba. Although low-income rates declined significantly among recent immigrants in that province, putting downward pressure on the overall rate, the share of the provincial population comprised of recent immigrants increased considerably, putting upward pressure on the rate. The end result was that immigration pushed up the provincial low-income rate by only about 0.2 percentage points.

Nonetheless, looking at the national, regional or provincial and municipal levels, recent immigration generally had little to do with the decline in low-income rates observed over the 2000s. The same conclusion holds when one looks beyond recent immigrants and considers the effect of immigrants with 1 to 15 years of tenure in Canada. Using this broader categorization, immigration accounted for only 7% of the decline in the national low-income rate over the 2000s, and for virtually none of the decline between 1995 and 2000. Likewise, immigration had little direct effect on low-income rates in most regions. Again, however, the major exception was Vancouver, where three-quarters of the decline in the low-income rate over the 2000s was associated with both falling low-income rates among immigrants and their declining share of the population. Montreal witnessed a similar but much-less dramatic pattern, with immigration accounting for about 15% of the 2.9-percentage-point decline in that city’s low-income rate.

A focus on income inequality, the ultimate goal of this paper, requires an analysis of changes across the entire income distribution, not just the bottom. In recent years there has been much debate regarding the increased concentration of income at the top of the distribution. This section concentrates on the top of the income distribution. It mirrors the low-income analysis presented in the previous section. The high-income cutoff used here is twice the median adult-equivalent-adjusted income. The median is the average observed over the years 1995, 2000, 2005 and 2010. The high-income cutoff is held fixed over time, so the analysis uses a fixed (not relative) high-income cutoff.

The proportion of population in Canada with “high family income” Note  11 rose rapidly between 1995 and 2010, from 6.7% to 16.1% (Table 3). This increase was observed among immigrants as well. Along with a declining share in “low income” as noted in the previous section, a rising share of immigrants found themselves with high income. This suggests a shift to the right in the income distribution among all groups, immigrants as well as the Canadian-born. Charts A.1 and A.2 (Appendix A) demonstrate this shift between 2000 and 2010. These charts also indicate the higher share of immigrants than Canadian-born in “low income” and a lower share with high income, particularly among the recent immigrants.

Not surprisingly, the high-income rate among immigrants, while increasing, is much lower than among the Canadian-born. In 2010, 4.6% of “recent” immigrants made it into the high-income category, compared to 9.6% of immigrants in Canada for 11 to 15 years, and 17% of the Canadian-born. Note  12

Just as the last section examined whether immigration contributed to the decline in the Canada-wide low-income rate during the 2000s, this section examines whether immigration contributed to the increase in the high-income rate observed between 1995 and 2010. Immigrants could affect this rate either because their share of the population was declining, or because their high-income rates were increasing at a faster rate than that of the Canadian-born. Table 3 suggests that neither of these events occurred. The same method as in the previous section on low income is used to determine the contribution of immigration to the rise in the high-income rate. Just as in the last section, immigration contributed little to the increase. Only from 1% to 2% of the increase in the high-income rate can be ascribed to changes in the immigrant population.

The trend in the “high-income” rate in Canada, as measured here, was very similar between the immigrant and Canadian-born population between 1995 and 2010, although more Canadian-born found themselves in that category.

4.1 Recent trends in family-income inequality in Canada

To assess the effect of immigration on income inequality, inequality trends in Canada are first reviewed. A number of recent papers have addressed the issue of family-income inequalityin Canada. Fortin et al. (2012) and Frenette, Green and Milligan (2007) focus on overall inequality, while Veall (2012) concentrates on changes at the top of the income distribution. These papers report income inequality trends and discuss possible explanations and policy implications.

Based on the survey data reported by Statistics Canada, family-income inequality as measured by the Gini coefficient fell marginally during the 1980s, increased significantly during the 1990s—mostly during the last half of the decade—and changed little during the 2000s (Chart 4). Note  13 Frenette, Green and Milligan (2007) stress the role of the tax-transfer system in preventing the rise in income inequality during the 1980s in the face of rising market earnings inequality. But the tax-transfer system could not repeat this feat in the 1990s, and family-income inequality rose under the pressure of rising market earnings inequality. Nonetheless, the inequality-reducing effect of the tax-transfer system was greater in 2000 than in the 1980s.

Moore and Pacey (2003) examine the direct effect of immigration on family-income inequality. Based on their findings, it was estimated that approximately one-half of the quite small increase in inequality over the 1980-to-1995 period was associated with immigration. Most of this effect was observed in the 1990-to-1995 period.

This analysis focuses on the period between 1995 and 2010 using taxation data. Adult-equivalent-adjusted Note  14 after-tax family income is used to assess income inequality. Family income is 'adult-equivalent-adjusted' to account for differences in family size among groups. The individual is the unit of analysis, since the adult-equivalent income is really a measure of the economic resources available to each individual in the family (a per capita measure). This measure of family income is ascribed to each member of the family. In calculating income inequality, the adult-equivalent-adjusted income is top-coded at $1,000,000. Note  15

Description for chart 4

Are taxation data representative of overall trends? Just as with low-income data, different data sources provide different levels of inequality, but the trends are quite similar. Inequality levels tend to be higher in census and taxation data than in survey data, Note  16 mainly because surveys tend to miss some low and high incomes reported in both taxation and census data (Frenette, Green and Picot 2004; Frenette, Green and Milligan 2007). This results in lower inequality levels in the survey data.

But the trends examined in this study over the 1995-to-2010 period are very similar to those in the taxation and survey data (Table 4). According to the after-tax income in survey data, most of the increase observed over the three decades occurs between 1995 and 2000. Of the 0.031-point increase in the Gini observed in the survey data between 1980 and 2010, 0.024 points, or about three-quarters of it, occurred between 1995 and 2000. The taxation data show a similar 0.025-point increase during this period, while the census data with estimated after-tax income Note  17 show very little increase. Income inequality typically rises in recessions, as it did in the early 1980s and 1990s, and therefore might be expected to fall in economic expansions. But this did not occur in the late 1990s’ expansion, and this period instead displayed the largest rise income inequality in the past three decades. Between 2000 and 2010, the survey data show no increase in the Gini, and the taxation data only display a small 0.004-point rise. Comparable data from the census are not available for this period. Overall, the trends over the 2000s observed in the taxation data (used here) and the survey data are very similar.

4.2 Inequality among the immigrant population

There are two basic findings regarding income inequality among immigrants that are germane to this analysis. First, levels of inequality tend to be marginally higher among the immigrant population than among the Canadian-born. Note  18 For example, in 2010, the Gini was 0.362 among the comparison group (mostly Canadian-born), and between 0.384 and 0.387 among immigrants in Canada for 1 to 15 years (Appendix Table A.4). This means that any increase in the immigrant’s share of the population will exert upward pressure on family-income inequality overall. Second, inequality among immigrants increased over the 1995-to-2000 period, just as it did for the Canadian-born. Similar to the trend among the Canadian-born, most of this increase was during the 1995-to-2000 period (Table A.4). This suggests that whatever pressures increased inequality among the Canadian-born may have also been applied to the immigrant population.

4.3 Assessing immigrant contribution to changing aggregate family-income inequality

Any group may have a direct effect on rising aggregate inequality for three possible reasons: (1) the level of inequality within the group may rise; (2) the level of income inequality among groups may rise; Note  19 or (3) a group’s share of the population may increase, and if that group’s level of inequality is above-average, as it often is for recent immigrants, this will contribute to rising inequality. In the analysis, the total population is divided into four groups: (1) the Canadian-born plus long-term immigrants; Note  20 (2) immigrants in Canada for 5 years or less (recent immigrants); (3) immigrants in Canada for 6 to 10 years; and (4) immigrants in Canada for 11 to 15 years.

The selected income indexes are decomposed to answer two questions. First, to what extent did each group contribute to the rise in family-income inequality in Canada over the reference period? And second, to what extent was this contribution due to (a) increasing inequality within the group; (b) the group’s rising share of the total population; and (c) increased inequality among groups (i.e., increased difference in mean family incomes among groups)?

While the Gini coefficient is the most commonly used inequality index, there are many others. In this analysis three decomposable indexes of inequality are used: the squared coefficient of variation ( C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@ ), the Theil, and the mean log deviation (Allison 1978; Jenkins 1999). More than one index is used because the value of some indexes are susceptible to movements at the top of the income distribution, while others are affected more by changes in income at the bottom. Such measures are taken to ensure that the findings are robust across the entire income distribution. The C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@  is affected more by income movements at the top of the distribution, where much of the action has been located over the past couple of decades. While both the mean log deviation and the Theil indexes are sensitive to changes at the lower end of income distribution, the mean log deviation is more so (Allison 1978; Jenkins 1999).

The change in inequality is decomposed as measured by C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@ , Theil and the mean log deviation over the 1995-to-2000 and the 2000-to-2010 periods. The focus is on the 1995-to-2000 period, since inequality increased most during this period. An algebraic description of this decomposition technique is presented in Appendix B.

Using these three decomposable indexes, the result of the analysis is straightforward, and all three indexes provide similar answers (Tables A.5, A.6, and A.7). Over the 1995-to-2000 period, during which most of the rise in inequality in Canada was concentrated, very little of the increase was associated with immigrant groups. Virtually all of the increase was due to increasing inequality within the comparison group (mostly Canadian-born).

For instance, inequality as measured by Theil index rose from 0.214 to 0.256 for the total population between 1995 and 2000, and remained more or less constant to 2010 at that level (Table A.4). Thus, the 0.042 changein the index value is decomposed. While the share of immigrants (with less than 15 years tenure) increased from 7.2% to 8.2%, the difference in inequality between immigrants and the Canadian-born was not sufficient to result in a major contribution. The increase in the share of immigrants accounted for only 0.001 of the 0.042 increase. The rise in inequality within the immigrant groups accounted for 0.002 of the total increase, while the change in between-group inequality contributed virtually nothing to the change (Table A.6). Overall, the immigrant groups accounted for about 0.002 of the 0.042 rise, or about 5%. This is about what might be expected since these immigrant groups accounted for about 7% of the population. They did not disproportionately contribute to the rise in inequality.

When the same analysis is conducted using the C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@  index, immigrant groups accounted for about 4% of the increase in inequality (Table A.5). Immigrants’ contribution to the change in the mean log deviation was larger than the changes in the other two indexes, about 26% (Table A.7). This is likely because the mean log deviation is most sensitive to changes in the bottom income distributions where immigrants are more likely to be concentrated.

Using all three indexes, the vast majority—between 88% and 97%—of the increase in inequality from 1995 to 2000 was associated with the rising inequality within the comparison group, which includes the Canadian-born and longer-tenured immigrants. This is also what might be expected since they accounted for the majority of the population.

But this result may not hold for all regions. In cities where immigrants constitute a large share of the population, did immigrants account for a disproportionately large share of the rise in income inequality in the late 1990s?

The Theil index was used to examine regional differences. In Toronto, the rise in inequality between 1995 and 2000 was somewhat larger than for Canada as a whole, increasing 0.072 points, or about 28%, compared to 20% for Canada. Virtually none of this increase was associated with the immigrant population, and fully 97% by rising inequality within the Canadian-born population (Table A.6). A similar story holds for Vancouver, where none of the rise in the 0.055-point increase in inequality (or 22%) was concentrated among the immigrant groups. Results are similar for Montreal, which experienced a much smaller increase of only 0.020 points (or 9%) in inequality.

The tax and transfer system both reduce inequality at any given point and time, and can potentially affect inequality trends over time. This was observed in the 1980s, for example, when earnings inequality was rising, but after the tax and transfer system redistributed some income, after-tax, after-transfer income inequality changed little. It may be that earnings-based inequality trends—before taxes and transfers—in Canada have been affected by immigration, even if such an effect is not observed when income is measured post tax and transfer, as in the previous section. To determine if this is the case, we replicate some of the previous sections analysis using family earnings, rather than after-tax, after-transfer family income.

As with family-income inequality, and based on the Gini, family-earnings inequality rose between 1995 and 2010, and most of the increase occurred during the late 1990s, although it increased marginally in the early 2000s. The family-earnings Gini for Canadians with positive family earnings rose from 0.420 in 1995 to 0.439 in 2000, and then to 0.447 in 2005. The other three indexes (the log deviation, Theil and C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@ ) tell a similar story; most of the increase occurred in the late 1990s, with some rise in the early 2000s.

Family-earnings inequality also rose among the immigrant population in Canada for less than 15 years, but the rise was observed more equally between the late 1990s and early 2000s. Little increase was observed in the late 2000s.

Did immigration contribute to the rise in family-earnings inequality in Canada? The answer is essentially no. The study’s focus is on the Theil index, the one used most often in the previous section. The Theil index increased from 0.324 in 1995 to 0.371 in 2000, an increase of 0.047. Of this increase, only 0.002 (or about 4%) is ascribed to changes in the immigrant population. These changes could include a rise in between-group inequality, a rise in within-group inequality or a change in immigrants’ share of the population. None of these possibilities occurred to a sufficient degree to significantly affect family-earnings inequality in Canada. Similarly, over the 2000-to-2010 period, when there was a much smaller increase of 0.007 in the Theil index, immigration accounted for none of this very small increase.

As noted in the introduction, increasing shares of immigrants can potentially affect the wages of the Canadian-born. This effect can vary across the wage distribution, thereby affecting wage inequality. The international literature suggests that the effect of immigration on wages can be positive or negative, but, in general, it is very small (Kerr and Kerr 2011; Longi, Nijkamp and Poot 2006, 2009; Okkerse 2008; European Economic Association 2012). But this effect can vary among countries depending on the type of immigrants entering the country, notably their occupational skills and education, and the country’s industrial structure.

In Canada, few papers have addressed this issue. Aydemir and Borjas (2007) find a negative effect of immigration on the wages of the Canadian-born. Overall a 10% immigration-induced increase in the labour supply, which is a very large supply increase, reduces wages of the Canadian-born by 3% to 4%. Immigration increases labour supply by perhaps 0.7% to 0.8% per year in Canada, which might reduce wages of the Canadian-born by around 0.3% according to this study. The negative wage effect is greater among the more highly educated since the immigration-induced labour supply increase is concentrated among this education group. Hence, Aydemir and Borjas conclude that by negatively affecting the wages of highly educated Canadians more than the less-educated (where the immigration effect may raise wages), immigration tended to reduce wage inequality. Note  21

But by how much? Between 1980 and 2000, wages fell by 2.2% among university graduates and by 16.2% among high school graduates (Table 4 in Aydemir and Borjas 2007). Hence, wage inequality rose across education groups; between-group inequality increased. Using the results from a series of simulations that Aydemir and Borjas produce, one can roughly estimate the wage change that might have occurred over the 20-year period in the absence of immigration. Wages among the highly educated would have increased by 4% to 8% (instead of a 2% decrease), and among high school graduates it would have fallen by 17% to 20% (rather than 16%). Hence, in the absence of immigration, the income gap between the more- and less-educated would have increased more than it did, and inequality across education groups would have risen more than what was actually observed. In short, immigration might have reduced between-group inequality somewhat. But it is important to remember that changes in overall inequality are also determined by within-group inequality. Within-group inequality among the highly educated Canadian-born could increase if immigration effects were concentrated among those who were located near the bottom of the within-group income distribution. This outcome seems quite possible, since, on average, better-educated immigrants earn less than their non-immigrant counterparts, and hence may compete more with non-immigrants at the bottom of the within-group wage distribution. This possible increase in within-group inequality could offset to some unknown extent the immigration effect that results in a decline in between-group inequality, and may lead to a small total indirect effect of immigration on income inequality among the Canadian-born. Thus, it seems likely that the kinds of effects found by Aydemir and Borjas would have had some effect, but not a large indirect effect on total wage inequality.

Tu (2010) used a methodology similar to that of Aydemir and Borjas, but applied it at both a national and sub-national level, and over a different time period (the 1990s). He finds no evidence of a negative effect of immigration on the wages of the Canadian-born, and in some specifications, a small positive effect. The zero or small effects found by Tu would have small effects on wage inequality.

Card (2009) provides an in-depth examination of the immigration effect on the wage distribution of the native-born in the United States (referred to here as the indirect effect of immigration). He notes that the answer depends on a number of factors, including the extent to which immigrants and the native-born with similar education levels are perfect substitutes and hence are competing directly with one another. Card (2009) and a number of other papers (Ottaviano and Peri 2012; Manacorda, Manning and Wadsworth 2012) determine that immigrants and the native-born are imperfect substitutes, and that new immigrants, in particular, likely compete more with other immigrants, especially the recently arrived, than with the native-born. Hence, immigration-induced wage effects may be more evident among other immigrants than among native-born workers.

Overall, Card concludes that in the United States the effect of immigration on native-born wage inequality is very small. Card argues that if the educational distributions of immigrants and the native-born are similar, there will be little effect. Accordingly, the immigration effect may be larger in Canada because educational distributions of immigrants and the native-born are more dissimilar in Canada than the United States—immigrants are more highly educated in Canada, and less-educated than the native-born in the United States. Note  22 Hence the downward pressure is more likely on the wages of the highly educated in Canada, since immigrants are overrepresented among this group. However, on balance, given the international and Canadian evidence, Card’s general conclusion likely applies to Canada as well, although additional research is needed to reach a more definitive conclusion.

This paper asks if immigration contributed to the decline in low-income rates in Canada during the 2000-to-2010 period. Low-income rates among immigrants declined over the 2000s, although their relative (to the Canadian-born) low-income rates did not improve. There was little progress in reversing the significant run-up in relative low-income ratios during the 1980s and 1990s. There were three regional exceptions to this general pattern: immigrant low-income rates did not fall in Toronto as in other regions during the 2000s (nor did rates among the Canadian-born), and rates among immigrants declined the fastest in Manitoba and Saskatchewan, where relative rates among recent immigrants fell back to around 1.2 times that of the Canadian-born, levels of relative rates not seen since the early 1980s.

Policies and practices regarding immigrant selection changed significantly during the 2000s, with the introduction of the Immigration and Refugee Protection Act in 2002, and the expansion of the Provincial Nominee Program (PNP) in Manitoba and Saskatchewan. These and other changes altered both the characteristics of entering immigrants and the programs of entry (i.e., immigrant class). These changes tended to increase entry earnings, and may have contributed to the fall in low-income rates observed among recent immigrants (in Canada for less than five years). This paper concludes that, at the national level, changes in immigrant characteristics—notably rising educational attainment and changing source regions—accounted for about one-third of the decline in the low-income rate among recent immigrants (in Canada five years or less) during the 2000s. Changing admission class did not have a significant effect nationally. At the regional level, changes in selection policies and practices over the 2000s varied tremendously as some provinces embraced the PNP more than others. Furthermore, the change in the number of recent immigrants in the population also varied by region due to a decentralization of entering immigrants away from Toronto towards the western regions in particular. As a result, the effect of compositional changes also differed by province. Changes in immigrant characteristics and entry program accounted for between one-fifth and one-half of the decrease in low-income rates among recent immigrants depending on the region.

Declining immigrant low-income rates contributed little to the fall in low-income rates among the general population in Canada during the 2000s. Unlike the 1990s, when rising immigrant shares and rates accounted for most of the increase in low-income rates in Canada, the decrease in the rates during the 2000s was driven primarily by falling rates among the Canadian-born. The only exception was Vancouver, where three-quarters of the decline in the city’s low-income rates was associated with both rapidly falling rates among immigrants and their declining share of the population.

Family-income inequalityincreased in Canada from 1990 to 2010, but the majority of the rise occurred during the late 1990s. Using three decomposable inequality indexes, the paper concludes that, for Canada as a whole, immigration contributed little to the increase of the late 1990s. This null result held for the three largest cities as well. Family-income inequality rose among the immigrant population during the late 1990s, as it did among the Canadian-born, but the immigrant population did not contribute disproportionately to the overall increase. There was little increase in family-income inequality in the 2000s.

A rising immigrant share of the population could also affect the wages and wage distribution of the Canadian-born. The international literature tends to suggest that the effect is generally small, whether positive or negative. If this immigration effect varies across the earnings distribution, then it can also indirectly change earnings inequality among the Canadian-born, and hence low-income rates and family-income inequality. While no original research is presented in this paper, a review of the extensive international literature along with the few Canadian papers that address this issue suggests that this effect is likely small.

Description for chart A.1

Description for chart A.2

This paper decomposes the three inequality indexes to  assess the contribution of each of four groups to the change over time in the index. The four groups used here are immigrants in Canada for 1 to 5 years, 6 to 10 years, or 11 to 15 years, and the remainder of the Canadian population, although this approach can be used for groups defined in any way. Following is the algebraic development of this decomposition.

At a given time point, the C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@  can be written as the sum of two terms: one is attributable to within-group income inequality, ∑ P i C V i 2 R i 2 MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuocbiGaa8huamaaBaaaleaacaWFPbaabeaakiaa=neacaWFwbWa aSbaaSqaaiaa=LgaaeqaaOWaaWbaaSqabeaaieaacaGFYaaaaOGaa8 NuamaaDaaaleaacaWGPbaabaGaaGOmaaaaaaa@4208@ , the second is attributable to between-group inequality, ∑ P i ( R i 2 − 1 ) MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuocbiGaa8huamaaBaaaleaacaWFPbaabeaakmaabmaabaGaa8Nu amaaDaaaleaacaWGPbaabaGaaGOmaaaakiabgkHiTiaabgdaaiaawI cacaGLPaaaaaa@418F@ , where P i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8huamaaBaaaleaacaWFPbaabeaaaaa@3A03@  is the population share of group i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@  (in our study, i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@  =1 to 4), C V i 2 MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa83qaiaa=zfadaqhaaWcbaGaamyAaaqaaiaaikdaaaaaaa@3B8E@  is the C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@  for group i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@ , and R i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8NuamaaBaaaleaacaWFPbaabeaaaaa@3A05@  is the ratio of the mean income of group i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@  to the mean income of the total population.

By straightforward algebraic manipulation, thechange in C V 2 MathType@MTEF@5@5@+= feaagKart1ev2aqatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiFu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaqefe KCPfgBaGqbaiaa=neacaWFwbWaaWbaaSqabeaacaWFYaaaaaaa@3C89@  over two time points can be decomposed into four terms.

Δ C V 2   =   ∑ Δ P i ( C V i 2 R i 2 + R i 2 − 1 )   +   ∑ Δ C V i 2 P i R i 2   +   ∑ Δ R i 2 P i ( C V i 2 − 1 )   + j o i n t       c h a n g e s . MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaeu iLdqecbiGaa83qaiaa=zfadaahaaWcbeqaaiaabkdaaaGccaqGGaGa eyypa0JaaeiiaiabggHiLJqaaiaa+r5acaWFqbWaaSbaaSqaaiaa=L gacaWFGaaabeaakmaabmaabaGaa83qaiaa=zfadaWgaaWcbaGaa8xA aaqabaGcdaahaaWcbeqaaiaabkdaaaGccaWFsbWaaSbaaSqaaiaa=L gaaeqaaOWaaWbaaSqabeaacaqGYaaaaOGaey4kaSIaa8NuamaaBaaa leaacaWFPbaabeaakmaaCaaaleqabaGaaeOmaaaakiabgkHiTiaabg daaiaawIcacaGLPaaacaqGGaGaey4kaSIaaeiiaiabggHiLlabfs5a ejaa=neacaWFwbWaaSbaaSqaaiaa=LgaaeqaaOWaaWbaaSqabeaaca qGYaaaaOGaa8huamaaBaaaleaacaWFPbGaa8hiaaqabaGccaWFsbWa a0baaSqaaiaadMgaaeaacaaIYaaaaOGaaeiiaiabgUcaRiaabccacq GHris5cqqHuoarcaWFsbWaa0baaSqaaiaadMgaaeaacaaIYaaaaOGa a8huamaaBaaaleaacaWFPbGaa8hiaaqabaGcdaqadaqaaiaa=neaca WFwbWaaSbaaSqaaiaa=LgaaeqaaOWaaWbaaSqabeaacaqGYaaaaOGa eyOeI0IaaeymaaGaayjkaiaawMcaaiaabccacqGHRaWkcaWGQbGaam 4Baiaa=LgacaWFUbGaa8hDaiaayIW7caaMi8UaaGjcVlaadogacaWG ObGaamyyaiaad6gacaWGNbGaamyzaiaadohacaGGUaaaaa@829B@

The first term is the contribution of changes in the population shares among groups; the second term is the contribution of changes in within-group inequality; the third term is the contribution of changes in between-group income inequality; and the fourth term is the joint changes of population shares, within-group inequality, and between-group inequality. The joint change term includes ∑ Δ P i Δ C V i 2 R i 2 + ∑ Δ P i C V i 2 Δ R i 2 + ∑ P i Δ C V i 2 Δ R i 2 + ∑ Δ P i Δ C V i 2 Δ R i 2 +         ∑ Δ P i Δ R i 2 MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuUaeuiLdqecbiGaa8huamaaBaaaleaacaWFPbGaa8hiaaqabaGc cqqHuoarcaWGdbGaamOvamaaDaaaleaacaWGPbaabaGaaGOmaaaaki aa=jfadaqhaaWcbaGaamyAaaqaaiaaikdaaaGccqGHRaWkcqGHris5 cqqHuoarcaWFqbWaaSbaaSqaaiaa=LgacaWFGaaabeaakiaadoeaca WGwbWaa0baaSqaaiaadMgaaeaacaaIYaaaaOGaeuiLdqKaa8Nuamaa DaaaleaacaWGPbaabaGaaGOmaaaakiabgUcaRiabggHiLlaa=bfada WgaaWcbaGaa8xAaiaa=bcaaeqaaOGaeuiLdqKaam4qaiaadAfadaqh aaWcbaGaamyAaaqaaiaaikdaaaGccqqHuoarcaWFsbWaa0baaSqaai aadMgaaeaacaaIYaaaaOGaey4kaSIaeyyeIuUaeuiLdqKaa8huamaa BaaaleaacaWFPbaabeaakiabfs5aejaadoeacaWGwbWaa0baaSqaai aadMgaaeaacaaIYaaaaOGaeuiLdqKaa8NuamaaDaaaleaacaWGPbaa baGaaGOmaaaakiabgUcaRiaayIW7caaMi8UaaGjcVlaayIW7cqGHri s5cqqHuoarcaWFqbWaaSbaaSqaaiaa=LgaaeqaaOGaeuiLdqKaa8Nu amaaDaaaleaacaWGPbaabaGaaGOmaaaaaaa@80A0@ . The joint change is generally very small.

The same approach can be used with the Theil index. At a given time point, the Theil index T MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8hvaaaa@38F1@  can be expressed as the sum of two terms: ∑ P i T i R i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuocbiGaa8huamaaBaaaleaacaWFPbGaa8hiaaqabaGccaWFubWa aSbaaSqaaiaa=LgaaeqaaOGaa8NuamaaBaaaleaacaWFPbaabeaaaa a@4030@ , the component representing within-group income inequality, and ∑ P i ln ( R i ) MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuocbiGaa8huamaaBaaaleaacaWFPbGaa8hiaaqabaGccaqGSbGa aeOBamaabmaabaGaa8NuamaaBaaaleaacaWGPbaabeaaaOGaayjkai aawMcaaaaa@41B2@ , the component representing between-group income inequality, where P i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8huamaaBaaaleaacaWFPbaabeaaaaa@3A03@  and R i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8NuamaaBaaaleaacaWFPbaabeaaaaa@3A05@  are defined the same as the above, T i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8hvamaaBaaaleaacaWFPbaabeaaaaa@3A07@  is the Theil index for group  i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaaaa@3906@ .

The change in T MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8hvaaaa@38F1@  over two time points can be decomposed into four terms.

Δ T   =   ∑ Δ P i R i ( T i +     ln R i ) + ∑ Δ T i P i R i + [ ∑ Δ P i R i ( T i + l n R i ) + ∑ Δ l n R i P i ( R i + Δ R i ) ]   +   j o i n t     c h a n g e s . MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGceaqabe aacqqHuoarieGacaWFubGaaeiiaiabg2da9iaabccacqGHris5cqqH uoarcaWGqbWaaSbaaSqaaiaadMgaaeqaaOGaa8NuamaaBaaaleaaca WFPbaabeaakmaabmaabaGaa8hvamaaBaaaleaacaWFPbaabeaakiaa bUcacaaMi8UaaGjcVlaabYgacaqGUbGaa8NuamaaBaaaleaacaWFPb aabeaaaOGaayjkaiaawMcaaiabgUcaRiabggHiLlabfs5aejaa=rfa daWgaaWcbaGaa8xAaaqabaGccaWGqbWaaSbaaSqaaiaadMgaaeqaaO Gaa8NuamaaBaaaleaacaWFPbaabeaakiabgUcaRmaadmaabaGaeyye IuUaeuiLdqKaamiuamaaBaaaleaacaWGPbaabeaakiaa=jfadaWgaa WcbaGaa8xAaaqabaGcdaqadaqaaiaa=rfadaWgaaWcbaGaa8xAaaqa baacbaGccaGFRaGaa4hBaiaa+5gacaWFsbWaaSbaaSqaaiaa=Lgaae qaaaGccaGLOaGaayzkaaGaey4kaSIaeyyeIuUaeuiLdqKaa4hBaiaa +5gacaWFsbWaaSbaaSqaaiaa=LgaaeqaaOGaamiuamaaBaaaleaaca WGPbaabeaakmaabmaabaGaa8NuamaaBaaaleaacaWFPbaabeaakiab gUcaRiabfs5aejaa=jfadaWgaaWcbaGaa8xAaaqabaaakiaawIcaca GLPaaaaiaawUfacaGLDbaacaqGGaaabaGaey4kaSIaaGPaVlaadQga caWGVbGaa8xAaiaa=5gacaWF0bGaaGjcVlaayIW7caWGJbGaamiAai aadggacaWGUbGaam4zaiaadwgacaWGZbGaaeOlaaaaaa@8DD0@

The first term is the contribution of changes in the population shares among groups; the second term is the contribution of changes in within-group inequality; the third term is the contribution of changes in between-group income inequality; and the fourth term is the joint changes of population shares, within-group inequality, and between-group inequality. The joint change term includes

∑ T i   Δ P i   Δ R i +  ∑ Δ T i   Δ P i R i +   ∑ Δ T i P i   Δ R i +   ∑ Δ T i   Δ P i   Δ R i + ∑ Δ P i   Δ R i ln ( R i ) +   ∑ Δ P i R i Δ ln ( R i ) +   ∑ Δ P i R i Δ ln ( R i )   +   ∑ Δ P i   Δ R i Δ ln ( R i ) . MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGceaqabe aacqGHris5ieGacaWFubWaaSbaaSqaaiaa=LgaaeqaaOGaaGjcVlab fs5aejaa=bfadaWgaaWcbaGaa8xAaaqabaGccaaMi8UaeuiLdqKaam OuamaaBaaaleaacaWGPbaabeaakiaabUcacaqGGaGaeyyeIuUaeuiL dqKaa8hvamaaBaaaleaacaWFPbaabeaakiaayIW7cqqHuoarcaWFqb WaaSbaaSqaaiaa=LgaaeqaaOGaamOuamaaBaaaleaacaWGPbaabeaa kiabgUcaRiaabccacqGHris5cqqHuoarcaWFubWaaSbaaSqaaiaa=L gaaeqaaOGaa8huamaaBaaaleaacaWFPbaabeaakiaayIW7cqqHuoar caWGsbWaaSbaaSqaaiaadMgaaeqaaOGaey4kaSIaaeiiaiabggHiLl abfs5aejaa=rfadaWgaaWcbaGaa8xAaaqabaGccaaMi8UaeuiLdqKa a8huamaaBaaaleaacaWFPbaabeaakiaayIW7cqqHuoarcaWGsbWaaS baaSqaaiaadMgaaeqaaOGaey4kaSIaeyyeIuUaeuiLdqKaa8huamaa BaaaleaacaWFPbaabeaakiaayIW7cqqHuoarcaWGsbWaaSbaaSqaai aadMgaaeqaaOGaaeiBaiaab6gadaqadaqaaiaadkfadaWgaaWcbaGa amyAaaqabaaakiaawIcacaGLPaaacqGHRaWkcaqGGaGaeyyeIuUaeu iLdqKaa8huamaaBaaaleaacaWFPbaabeaakiaadkfadaWgaaWcbaGa amyAaaqabaGccqqHuoarcaqGSbGaaeOBamaabmaabaGaamOuamaaBa aaleaacaWGPbaabeaaaOGaayjkaiaawMcaaaqaaiabgUcaRiaabcca cqGHris5cqqHuoarcaWFqbWaaSbaaSqaaiaa=LgaaeqaaOGaamOuam aaBaaaleaacaWGPbaabeaakiabfs5aejaabYgacaqGUbWaaeWaaeaa caWGsbWaaSbaaSqaaiaadMgaaeqaaaGccaGLOaGaayzkaaGaaeiiai abgUcaRiaabccacqGHris5cqqHuoarcaWFqbWaaSbaaSqaaiaa=Lga aeqaaOGaaGjcVlabfs5aejaadkfadaWgaaWcbaGaamyAaaqabaGccq qHuoarcaqGSbGaaeOBamaabmaabaGaamOuamaaBaaaleaacaWGPbaa beaaaOGaayjkaiaawMcaaiaac6caaaaa@B2DC@

At a given time point, the mean log deviation, L   MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8htaiaayIW7aaa@3A7A@ , can be written as the sum of two terms: ∑ P i L i   MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuocbiGaa8huamaaBaaaleaacaWFPbGaa8hiaaqabaGccaWFmbWa aSbaaSqaaiaa=LgaaeqaaOGaaGjcVdaa@3FD0@ , the component representing within-group income inequality; and ∑ P i  ln ( R i ) MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuocbiGaa8huamaaBaaaleaacaqGPbGaaeiiaaqabaGccaqGSbGa aeOBamaabmaabaGaa8NuamaaBaaaleaacaWFPbaabeaaaOGaayjkai aawMcaaaaa@41B2@ , the component representing between-group income inequality, where L i MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8htamaaBaaaleaacaWFPbaabeaaaaa@39FF@  is the income inequality index for group i   MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8xAaiaayIW7aaa@3A97@ . The change in L MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaacbi Gaa8htaaaa@38E9@  over two time points can be decomposed into four terms:

Δ L = ∑ Δ P i [ L i + ln ( R i ) ] + ∑ Δ L i P i + ∑ Δ ln ( R i ) P i +  j o i n t     c h a n g e s . MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaeu iLdqecbiGaa8htaiaa=1dacqGHris5cqqHuoarcaWFqbWaaSbaaSqa aiaa=LgacaWFGaaabeaakmaadmaabaGaa8htamaaBaaaleaacaWFPb aabeaakiabgUcaRiaabYgacaqGUbWaaeWaaeaacaWFsbWaaSbaaSqa aiaa=LgaaeqaaaGccaGLOaGaayzkaaaacaGLBbGaayzxaaGaae4kai abggHiLlabfs5aejaadYeadaWgaaWcbaGaamyAaaqabaGccaWFqbWa aSbaaSqaaiaa=LgacaWFGaaabeaakiaabUcacqGHris5cqqHuoarca qGSbGaaeOBamaabmaabaGaa8NuamaaBaaaleaacaWFPbaabeaaaOGa ayjkaiaawMcaaiaa=bfadaWgaaWcbaGaa8xAaiaa=bcaaeqaaOGaae 4kaiaabccacaWFQbGaa83Baiaa=LgacaWFUbGaa8hDaiaa=bcacaWF JbGaa8hAaiaa=fgacaWFUbGaa83zaiaa=vgacaWFZbGaa8Nlaaaa@6C55@

The joint change term includes ∑ Δ L i Δ P i   + ∑ Δ P i Δ ln ( R i ) MathType@MTEF@5@5@+= feaagKart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLn hiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr 4rNCHbcvPDwzYbGeaGqiVu0Je9sqqrpepC0xbbL8F4rqqrFfpeea0x e9Lq=Jc9vqaqpepm0xbba9pwe9Q8fs0=yqaqpepae9pg0FirpepeKk Fr0xfr=xfr=xb9adbaqaaeGaciGaaiaabeqaamaabaabaaGcbaGaey yeIuUaeuiLdqecbiGaa8htamaaBaaaleaacaWFPbGaa8hiaaqabaGc cqqHuoarcaWFqbWaaSbaaSqaaiaa=LgaaeqaaOGaaiiOaiabgUcaRi abggHiLlabfs5aejaa=bfadaWgaaWcbaGaa8xAaiaa=bcaaeqaaOGa euiLdqKaaeiBaiaab6gadaqadaqaaiaa=jfadaWgaaWcbaGaa8xAaa qabaaakiaawIcacaGLPaaaaaa@4F6F@ .

Inequality in Canada

Socioeconomic inequality and uneven wealth distribution are among the most common social justice issues in every society. Unemployment, lack of opportunities, and unequal payment among employment are some of the leading causes of socioeconomic inequality. Canada, like other countries around the world, faces a challenge with social inequality and uneven distribution of wealth (Stigendal, 2018). The government has started initiatives to address the challenge and ensure increased social equality. Some of the initiatives include economic policies to reduce unemployment rates and increase minimum wages and pay equality. The government has also initiated social programs to aid the poor and marginalized (Stigendal, 2018). Most of these decisions and initiatives have responded to activist efforts that have been made over the years to attract the government’s attention to the plight of the poor and the marginalized. Activist groups have increasingly sought the assistance of famous and influential people to spread their messages and catch the attention of the masses and the government. Activists have also incorporated their messages in popular culture, such as film and music, a strategy that has proven effective in pushing for changes in government policy. It is essential to study and understand the causes of inequality to determine the most effective strategies to combat it in the future and mitigate its impacts in the process.

Numerous factors have served to cause the high social inequality in Canadian society. Among these is the coronavirus outbreak that started in December 2019 (IMF.org, 2022). The coronavirus outbreak later evolved into a global pandemic that affected the global economy and many people’s ability to make a living. The virus outbreak forced many governments to impose lockdowns on their populations to control the spread of the virus. Such measures, while necessary, slower the global economy significantly (IMF.org, 2022). Many businesses laid down large parts of their staff, retaining only those essential to daily operations. Some companies were affected irreparably by the economic downturn, some to the extent of closing down and laying off their entire staff. The coronavirus outbreak gave rise to a new phenomenon called remote working. Remote working is a practice where employees can work from their homes or other preferred location away from the office (IMF.org, 2022). Communication would benefit primarily through information technology and is often only done when an urgent issue arises. Remote working was initially adopted to ensure social distancing and prevent the spread of the coronavirus among co-workers in the workplace. Many companies, however, retained remote working after the danger of the spread of coronavirus had lapsed because it is a unique and convenient way of reducing operating costs for companies while still gaining the most from their employees (IMF.org, 2022). Employees become more productive as they create their ideal environment and self-motivate to achieve organizational goals.

Apart from the coronavirus outbreak, other factors play prominent roles in causing social inequality in Canada and around the world. Indeed, the global pandemic was the newest factor causing inequality, and its effects are more short-term than long-term. The actual cause of social inequality has longer-lasting impacts and affects a larger scale of the population than the coronavirus outbreak. Globalization is one of the leading causes of global and local inequality in countries such as Canada (Reza Nakhaie et al., 2007). With opening borders and global trade routes, more prosperous countries in the global economic north source products cheaply from those in the final economic south. One of the most common and high-demand goods that richer countries source from poorer ones is cheap labor (Reza Nakhaie et al., 2007). Richer countries seek to increase their manufacturing capacity by seeking cheap unskilled labor from underdeveloped or developing countries. Inversely, globalization also opens up new markets for export in high-tech companies that use more skilled labor (Reza Nakhaie et al., 2007). The impact is that there is less incentive to increase wages for unskilled labor within the country as most of their roles can be outsourced. Similarly, there is increased demand for highly skilled labor as the market for high-tech goods expands. The effect is a widening wage gap which ultimately leads to greater inequality within the countries in the global north, such as Canada.

Another factor that fuels inequality is technological advancement. The proliferation of technological inventions in the recent past has led to a paradigm shift in the world. Manufacturing is fast being replaced by technology as the most valuable facet of society to be employed in (Mohtadi & Castells-Quintana, 2021). Indeed, so important has technology become that the 21 st  century is vastly referred to as the century of the technological revolution. Consequently, possessing skills and knowledge in technology makes one more valuable than those who possess skills in the industry, regardless of experience and level of education. Companies are keen to attract the most talented people in the technology fields and, therefore, offer higher wages and better compensation in that industry. There is, however, less incentive for those who lack the relevant skillsets for the technology industry, leading to a widening wage gap between the industries (Mohtadi & Castells-Quintana, 2021). Another major challenge with technology is that it has rendered many positions held by the middle class obsolete as computers and machines can now do them. The conditions that technological advancements have created increase socioeconomic inequity in society.

Commodity price cycles also play a role in determining social inequality. Commodities’ prices are often driven by different market factors and the forces of demand and supply (IMF.org, 2022). The prices of products are high when the demand surpasses the supply and low when there is a higher supply than demand. The relationship between demand and supply is one of the primary principles in economics and determines many socioeconomic practices, including the government’s economic policy. Commodity prices affect inflation but mainly only when they have affected the capital-intensive markets compared to the labor-intensive markets. Capital-intensive markets are those commodities more concerned with creating wealth, such as residential buildings, furniture, and banks (IMF.org, 2022). The prices of such commodities have a ripple effect affecting the entire economy. An increase in housing prices, for instance, makes it difficult for low-income houses to afford to house. However, higher-income households can afford the houses and buy them either to sell at a profit or rent out to tenants. The impact is a widening income gap not created by the wage gap. For free markets such as Canada, the government cannot control commodity price life as that would be interfering with a free market and might affect its stability. The only form of intervention that the government can make is to adopt fiscal and monetary policies that create a balance between supply and demand (IMF.org, 2022). The government’s main aim should be to increase employment rates and control inflation, giving the majority of the population relative purchase power. Through such a strategy, the people have enough purchasing power to control the market as they have greater bargaining power than the sellers.

As aforementioned, recent years have seen a proliferation of activist activity around the issue of social inequality in Canada. While activism is not a new phenomenon in the country, it gets more attention and has more reach now than in the past. With the advent of new information technologies such as smartphones, personal computers, and the internet and social media, activists can now film their actions and spread them to their audience (Wagner, 2021). These gadgets allow the activists to reach w broader audience and gain more significant support from people in different geographic locations. They also gain the attention of traditional mainstream media and get coverage as the larger the audience an event reaches, the more newsworthy it becomes (Wagner, 2021). Activists have also learned to seek the support and endorsements of famous individuals who share their beliefs and course. Celebrity involvement in activist activities gives them more traction, especially among their fans and followers (Wagner, 2021). All these factors have made activism in the 21 st  century more effective. Through such methods, activists have managed to reach the government’s attention and inspired policy changes that have had a powerful impact on the socioeconomic inequality issue in Canadian society.

The Canadian government, in response to increased public outcry and in keeping with its responsibility of addressing its population’s wellbeing, has adopted numerous changes to address the socioeconomic inequality in the country. Canada operates under an opportunity for all doctrine where every individual is exposed to the same opportunities and has an equal chance for success. However, that doctrine becomes detrimental when the opportunities are made scarce by market forces and other circumstances that are beyond human control. The government has, therefore, partnered with community organizations and the private sector to uplift all Canadians and reduce the poverty rates. The government has initiated multiple social security programs to help uplift some of the most adversely affected households out of poverty. These programs advance education, health, and housing inequality, the three vital social areas where inequality is most inhumane. The government started the Canada child benefits fund, where families receive financial aid to assist in bringing up children (Hee, 2022). The guaranteed income supplement fund is a program that gives money to senior citizens to help them retire with dignity (Hee, 2022). The Canadian workers’ benefit provides money for low-class families and the unemployed to help them escape poverty and join the middle class (Hee, 2022). These programs aim for the government to ensure that all Canadian citizens and residents can live in dignity, achieve resilience and security, and experience opportunity and inclusion. The government will effectively fight inequality and create a fair and just society through these strategies.

Hee, H. M. M. (2022).  Social Inequality in Canada: Dimensions of disadvantage . OXFORD UNIV PRESS US.

IMF.org. (2022).  Introduction to inequality . IMF. Retrieved December 10, 2022, from https://www.imf.org/en/Topics/Inequality/introduction-to-inequality

Mohtadi, S., & Castells-Quintana, D. (2021). The distributional dimension of the resource curse: Commodity price shocks and income inequality.  Structural Change and Economic Dynamics ,  59 , 63–78. https://doi.org/10.1016/j.strueco.2021.08.002

Reza Nakhaie, M., Smylie, L. K., & Arnold, R. (2007). Social Inequalities, social capital, and health of Canadians.  Review of Radical Political Economics ,  39 (4), 562–585. https://doi.org/10.1177/0486613407306823

Stigendal, M. (2018). Systemic causes of inequality.  Combatting the Causes of Inequality Affecting Young People Across Europe , 47–62. https://doi.org/10.4324/9781315225883-4

Wagner, L. (2021). Chapter 8 developing a repertoire of activism strategies.  Language Activism , 188–214. https://doi.org/10.1515/9781501511561-008

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• Inequality Explained: The hidden gaps in Canada’s education system

While Canada’s education system ranks high among OECD countries, socioeconomic inequality factors in at all levels. This is why it matters.

Graduate student

This explainer was written by a group of UBC graduate students as part of our Lind Initiative  series  on inequality. It was an assignment from a course on public policy. 

How does income inequality impact educational attainment? Despite Canada’s efforts to promote equal access to education, the experiences and outcomes of students differ greatly depending on their family incomes. Here, we explore the educational opportunities of the top and bottom 10 percent within the early childhood, primary, secondary and postsecondary sectors. We illustrate how, in Canada, these unequal groups are differentiated by much more than just income.

Who’s in the top 10 percent of Canada’s earners?

A typical family belonging to the top 10 percent of earners in Canada receives an annual income of $200,000 or more. Parents in such households are much more likely to have attained a higher educational degree and professional status in medicine, law, finance or academic postings. With more money comes more resources to not only provide their children with quality childcare, summer camps, private international schools, extracurricular activities and postsecondary education, but also to cover domestic services in order to gain time to spend with their children.  

Who’s in the bottom 10 percent?

Contrastingly, in Canada a family in the bottom 10 percent makes below $30,000 a year, less than half of the estimated $79,600 average Canadian family income. With 6.7 percent of paid employees earning minimum wage, a child born in the bottom 10 percent is likely to have parents, if employed, earning $10.14 an hour . The bottom 10 percent household income group is where most First Nations families are found. In most cases, parents would have not completed secondary or postsecondary education, creating a divide in the academic support they can provide, especially when compounded with economic factors.

A note on Indigenous education

Although this article attempts to depict educational inequality in a wider Canadian setting, the inequalities in First Nations reserves deserves particular attention. The median income of Canada’s Indigenous population aged 25 to 54 is estimated to be $11,000 lower than their non-Indigenous counterparts.  Furthermore,  the employment ratio is   14.3 percentage points  lower for First Nations individuals than for others.  Thus, for reasons elaborated upon below, it should not be a surprise that the 2011 postsecondary education graduation rate of First Nations youth was only 35.3 percent. Compare this to the 78 percent graduation of their non-Indigenous counterparts and the educational gap becomes seriously alarming. Moreover, income inequality and the educational disparities associated with it are further aggravated when we differentiate between First Nations living on and off reserves.

The early childhood experience

It is well known that early child development is crucial for future well-being. Although far from deterministic, the role of education should not be neglected, especially given its direct and indirect impact on later income, health and even life-expectancy. Extensive research has shown that early literacy skills acquired even before entering kindergarten strongly influence a child’s later academic success. Numerous studies reiterate the importance of early childhood development, highlighting the difficulty of overcoming developmental inequalities. Yet what ought to be more deeply considered is the systemic impact of social and economic inequality, especially as early development depends almost entirely on the resources a family can access both for learning skills and for basic necessities. Plainly put in a BC teacher’s letter to The Vancouver Sun : “it is hard to learn if you are cold, hungry and worried.”

Canada’s top earning families: Without affordable universal child care, children in Canada will have vastly different experiences, with those from higher-income families being more likely to spend their pre-school years in high-quality licensed child care. Full-time care from the end of parental leave until the start of kindergarten costs a family in B.C. approximately $50,000 in child care fees . In licensed child-care facilities children are taken care of by professionals with degrees in education, who not only provide a safe and comfortable environment but also teach pre-literacy and numeracy skills. In the highest-quality, and thus most expensive, childcare options, children receive better health, safety and nutrition, smaller class sizes, opportunities to develop motor, social, language and cognitive skills through play, and more in-centre resources to foster growth. Moreover, parents from the highest-income families tend to hold higher levels of education themselves, and in turn pass on both the knowledge and dispositions that aid success in structured learning environments. Together, supplementary early childhood activities, quality childcare and social transfers result in children from the top 10 percent gaining indispensable social and academic skills.

Canada’s lowest income group: With the exception of Quebec, Canadian provinces spend extremely low percentages of GDP on childcare. The report “Growing Up in BC – 2015” claims that about 30 percent of children who start kindergarten in British Columbia are vulnerable in at least one key area of early child development. For families living in British Columbia, it is often more expensive to have a child in full-time daycare than to pay for an undergraduate degree. If a family cannot afford these costs, they look for cheaper options, and while not always inferior, reduced funding impacts the services available. Children whose parents are struggling economically often end up in less regulated environments, which may impact both health and safety risks, and physical and intellectual development. Academic and social segregation is already apparent by the time children start school. Preparedness to learn is often dramatically lower for children living in poverty compared to their peers from higher-income families, due in part to both early child care and learning opportunities and external support. Families living in poverty have less access to the resources necessary in the early years to prepare children for success at school.

The public education system

According to the OECD’s Programme for International Student Assessment (PISA), Canada consistently ranks among the highest achieving and the most equitable education systems in OECD countries. The public education system is praised for providing equal opportunity for all young Canadians to achieve elementary and secondary education. However, the socioeconomic impacts that visibly affect the quality of early childhood education clearly continue into the Canadian elementary and secondary school systems. When comparing students in the top 10 percent and the bottom 10 percent, there are striking differences in children’s readiness for school and parental ability to support their child’s education (through extra-curricular activities and external academic help, for example). The educational gap widens with unequal access to the best schools and with the separation of ‘good’ students from ‘bad’ students through academic streaming.

Top income earners: Canadian students from wealthier families enter elementary school already steps above other students in terms of their preparedness for school. UNICEF defines this preparedness in its Conceptual Framework for School Readiness : “success in school is determined by a range of basic behaviours and abilities, including literacy, numeracy, ability to follow directions, working well with other children and engaging in learning activities.”

The Canadian Teachers’ Federation emphasizes the importance of daily reading and participation in sports and physical activity, pointing specifically to the role positive parental involvement has in preparing children for school. Unequally distributed, participation occurs at higher levels in higher income households.

In addition to behavioural benefits, the schools with a higher proportion of wealthy students (i.e. those in high-income neighbourhoods) receive a higher academic ranking . Statistics Canada shows that “the higher socio-economic status of private school students and their peers accounts for half of the difference in the average score of standardized tests between private and public school students.” This achievement gap widens and enforces income inequality by supporting the future success of high-income students and leaving low-income students behind.

Lowest income bracket: On average, the situation for students in low-income families is entirely different. They face inequalities beyond just access to academic and extracurricular support. This becomes obvious when looking at the one in five children in British Columbia who currently live in poverty, without safe and secure housing, basic necessities such as warm clothing, and access to sufficient food. In Toronto and elsewhere, household instability and poverty may be contributing to the underrepresentation of low-income students with a ‘gifted’ designation (unusually high intellect) and overrepresentation of this group in the ‘special needs’ categorization.

Lower income is also connected to behavioural problems affecting students’ learning at a higher level than their wealthier peers. What makes matters worse is that low-income students are often restricted by school choice and the possible pathways their school offers. With regard to school rankings, lower income neighbourhoods consistently obtain lower achievement levels. Moreover, in schools with separate academic ‘pathways,’ low-income students are more than twice as likely to end up in applied-level classes, often leaving them unprepared for graduation and ineligible for many postsecondary opportunities.

The world of higher education

Despite Canada’s relatively few private institutions, comparably lower tuition and initiatives to increase accessibility for underrepresented groups, Canadian higher education nevertheless has an elitism that often goes unnoticed. Given that the majority of high school graduates will now attend postsecondary institutions of some type, inequality in higher education is not just an ‘access’ issue, dealing with who is ‘in’ or ‘out.’

Two new aspects of inequality within postsecondary education have been considered. First, researchers have charted how elite status shifts upward: as one level of education becomes saturated, higher and more difficult credentials become benchmarks for high attainment. Second, others argue that elite differentiation is now less connected to simply higher credential levels themselves, but rather pertains to differences in what, where and how one studies – a undergraduate degree from the University of Toronto provides better life chances than the same credential from a smaller, lesser-known institution just down the street. Indeed, as we follow the educational pathways of the top 10 percent and bottom 10 percent of earners in Canada, we find that both aspects are important to consider.

Top earners: Educational inequality is most acute when the top 1 percent of income earners is compared to the general population in Canada. As presented in a paper by Thomas Lemieux and W. Craig Riddell called “Top incomes in Canada: Evidence from the Census,” statistics show that although the percentage of income earners who held at least a bachelor’s degree grew from just over 10 percent in 1986 to 19 percent in 2006, the top one percent were three times more likely to hold a bachelor degree or higher, moving from 53 percent in 1986 to 65 percent by 2006.  

Likewise, differentiation is found when examining what subjects are studied by top earners. According to Lemieux and Riddell, by 2006 a quarter of top earners had studied commerce, management and business at the higher education level, compared to just 11 percent of the general population. Indeed, certain fields of study are found to have substantial earning power over others, even if the credential level is the same. For example , over a 20-year period, women who graduate with a bachelor’s degree in fine arts can expect to make $652,100 while men who graduate from business can expect to make almost three times more, earning, on average, $1,619,400.  The gulf is much smaller when the reverse is examined: men with a degree in fine arts earn $843,900 while women in business earn $1,169,100.

Lowest income group: It is important to take stock of not only the lack of access for the poorest in Canada, but also the forms of access made available and the inequalities they produce. One major marker is debt accumulation. With the cost of tuition more than doubling since 1989, student loans have become a distinguishing factor of early wealth accumulation, as non-borrowers are found to own almost double the assets and three-times the net worth.

Although the Canadian student loan program allows those with limited economic means to access higher education, the bottom 10 percent often attends lesser-recognized and established institutions. A key player is for-profit private colleges, institutions with comparably lower entrance requirements and flexible programming. Yet in Canada private sector graduates have been found , on average, to earn no more than those with a high school diploma. Strapped with student loans and no earning premium, private-college graduates are more likely to default on their loans. As seen this year with the closure of Everest College in Ontario, graduates of private colleges are even now requesting loan forgiveness for what they dub “worthless” diplomas.

What can be done?

Traditional policy responses to gaps in the education system often involve increasing funding for specific programs, schools or sectors. Below are examples of experts’ current policy recommendations, by level of education:

  Early Childhood Education: Varying in effectiveness, programs and campaigns promoting accessible and affordable early childhood education exist across Canada. In British Columbia, the Early Childhood Educators of BC  and the  Coalition of Child Care Advocates of BC  have partnered to organize the $10aDay Child Care Campaign , which advocates for a $10 daily child care fee – waived for lower income families – to better guarantee quality regulated care for all children. Of note, this campaign includes a special focus on First Nations communities, aiming to develop culturally relevant child care services that “would meet their needs and their human and constitutional rights.”

Public Education : In the public education sector, several reforms are promoted, including funding for additional and better trained teachers to facilitate smaller class sizes and address individual students’ needs. The Canadian Council of Ministers of Education reiterates the importance of teacher training and specifically highlights the integration of technology in the classroom to reduce educational gaps. Targeted programs have also been key. An astonishingly successful example is the 1997 tripartite agreement that established the Mi’kmaw Kina’matnewey as a First Nations educational advisory board independent of the federal government. With the mandate of advising rather than controlling, Mi’kmaq secondary schools prioritize cultural education and Mi’kmaq language. In 2012-2013, the graduation rate was over 87 percent, compared to the national First Nations average of roughly 35 percent .

Higher Education : Higher education advocacy groups in Canada are largely fragmented by sector, although there is much overlap in their policy recommendations. For example, Universities Canada and College and Institutes Canada both advocate for better employment outcomes through increasing the number of co-op placements and paid internships, increasing the number of indigenous learners through funding and enhanced programming, and governmental support for research and innovation. Other groups focus on equalizing access to higher education; for example, both the Canadian Centre for Policy Alternatives and the Canadian Federation of Students recommend a fully funded public postsecondary education system with no or low tuition fees.

Although many of these policies and initiatives create noticeable success, it is evident from the systemic nature of the inequality in Canada’s education system that the responses must go beyond the typical silver bullet solutions. Individuals and groups are privy to shockingly different educational pathways. Without addressing systemic income inequality solutions aimed at only the educational system itself will fall short. 

Policy think tanks and government bodies increasingly recognize the need for a broad approach to resolve educational inequalities. The Canadian Federation of Teachers emphasize the need for a national poverty reduction strategy for Canada , which would include a higher minimum wage, broader eligibility for Employment Insurance and greater access to social housing. These necessary policy recommendations dovetail with the House of Commons all-party resolution to eliminate childhood poverty by the year 2000, a goal that thus far remains unattained. Although this campaign resulted in the creation of advocacy groups and organizations across the country, it remains unclear why childhood poverty still remains.

A public inquiry into the unaddressed and systemic inequalities is necessary to develop comprehensive and effective strategies to truly offer the equitable education system Canada aims to provide. Local schools and communities alongside political offices need to identify how educational disparity stemming from economic inequality affects the life chances of individuals and groups. If we continue to examine educational inequality as if it is not the logical consequence of economic inequality, but somehow a facet of society that can be bracketed out and ‘fixed,’ then we are bound to fall short of our laudable goals in this country.

This explainer was written by a group of UBC graduate students as part of our Lind Initiative  series  on inequality .

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Also in the series

Inequality Explained: Everything you need to know about the TPP’s arbitration provision

Here are the pros and cons of the mechanism within the Trans-Pacific Partnership for solving disputes between investors and foreign governments.

Inequality Explained: The trouble with pharmaceutical patents

Can policy change lead to more equitable access to life-saving medicines?  

Inequality Explained: Will the Trans-Pacific Partnership affect Canada’s food sovereignty?

Nine questions on the TPP’s potential impact Canadians should be asking.  

Inequality Explained: 7 ways climate change and inequality are connected

The link is clear, so what can be done?

Inequality Explained: Lessons from South Africa’s Marikana massacre

When tension grows between people and profit, communities must learn how to extract, manage and share resources in a just way.

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Social Conditions of Indigenous Peoples in Canada

Article by Joe Sawchuk

Updated by Anne-marie Pedersen, Velvet Maud, David Koch, Michelle Filice

Published Online October 31, 2011

Last Edited May 27, 2020

Social conditions, including health , income, education , employment and community, contribute to the well-being of all people. Among the Indigenous population in Canada (i.e., First Nations , Métis and Inuit peoples), social conditions have been impacted by the dispossession of cultural traditions, social inequities, prejudice and discrimination . Social conditions also vary greatly according to factors such as place of residence, income level, and family and cultural factors. While progress with respect to social conditions is being achieved, gaps between the social and economic conditions of Indigenous people and non-Indigenous people in Canada persist.

Funding for Social Services

Historically, the federal government has been responsible and provided funding for nearly all the social programs and services provided to Indigenous peoples in Canada. First Nations  peoples registered with  Indian status receive federal funds for social programs on  reserves  through the  Indian Act . The funding is directed to First Nations  band  administrations. In the past, discriminatory sections in the Indian Act have prohibited some people, particularly women who married non-status men, from accessing social services. ( See also Women and the Indian Act .) Inuit , Métis and non-status First Nations peoples receive funding through the department of Indigenous Services Canada , created in 2017.

National, provincial and territorial Indigenous representative organizations such as the  Assembly of First Nations ,  Métis National Council , Congress of Aboriginal Peoples  and the  Inuit Tapiriit Kanatami  often have mandates that include the improvement of social conditions and represent or advocate for the interests of their members. Many of these organizations receive funding from the federal government. Friendship Centres (non-governmental agencies) also provide various programs and services to urban Indigenous peoples.

Indigenous Populations in Canada

In 2016, 1,673,785 people reported an Indigenous identity, making up 4.9 per cent of the Canadian population. Additionally, 977,230 people reported being First Nations (including status and non-status people), 587,545 reported being Métis , and 65,025 reported being Inuit . Since 2006, the Indigenous population has grown by 42.5 per cent. This represents a growth rate four times that of the non-Indigenous population.

The Indigenous population of Canada continues to be predominately urban. According to the 2016 census, 867,415 Indigenous people lived in a city of more than 30,000 people, accounting for over half of the total Indigenous population. During this same period, metropolitan areas with the largest Indigenous populations were  Winnipeg  (92,810),  Edmonton  (76,205), Vancouver  (61,460) and Toronto (46,315).

Income Levels and Education

In 2019, the rate of employment for Indigenous peoples in Canada (57.5 per cent) was lower than the non-Indigenous population (62.1 per cent). The rate for First Nations people (over 15 years old) was 53.8 per cent, 61.3 per cent for the Métis and 49.0 per cent for the Inuit . ( See also Economic Conditions of Indigenous People ).

In comparison to non-Indigenous peoples, Indigenous peoples’ income tends to be below the Canadian average. In 2016, the median after-tax income for non-Indigenous people was $31,144. For those who identified as First Nations, it was $21,253, for Métis, $29,068, and Inuit, $23,635.

In 2016, 68.3 per cent of the Indigenous population aged 25 to 64 had a post-secondary certificate, diploma or degree, compared to 70.4 per cent of the non-Indigenous population. Contemporary research has found that educational attainment rates and income are directly related. Indigenous educational programs are crucial to closing the income gap between Indigenous and non-Indigenous wage earners. ( See also  Education of Indigenous Peoples in Canada .)

Housing and Living Conditions

In 2016, one in five Indigenous people (19.4 per cent) lived in a dwelling that required major repairs, compared to 6 per cent of the non-Indigenous population. Mould , bug infestations, inadequate heating and contaminated water ( see also Grassy Narrows ) are just some of the issues that plague First Nations peoples living on reserves .

Overcrowding is another issue affecting Indigenous living conditions. In 2016, 18.3 per cent of Indigenous people lived in overcrowded housing, compared to 8.5 per cent of the non-Indigenous population. In the same year, 40.6 per cent of Inuit and 8.6 per cent of Métis lived in housing that was crowded. The number of First Nations people living in a crowded dwelling on reserve (36.8 per cent) was higher than First Nations people living elsewhere in Canada (18.5 per cent).

Health of Indigenous Peoples

Indigenous households are more likely than non-Indigenous households to experience food insecurity. In 2019, 48 per cent of First Nations households did not have enough income to cover their food expenses. In comparison, the food insecurity rate for the country was 8.4 per cent.

People living in remote and northern communities have a more difficult time accessing and affording food. In Nunavut , for example, 46 per cent of households were affected by food insecurity in 2016. Access to certain foods such as fruit, vegetables and milk is more difficult because they must be transported long distances. The resulting high costs, limited availability and lower quality of the food contributes to food insecurity.

In some communities, the harvesting of traditional foods, such as  seal ,  caribou ,  duck , whale  and  fish , helps to offset some of the issues accessing food. However, many communities continue to call on governments for increased support. ( See also Country Food (Inuit Food) in Canada .)

Criminal Justice System

Indigenous people are over-represented in the criminal justice system as offenders and inmates, and under-represented as officials, officers, court workers or lawyers. Rates of incarceration among the Indigenous population continue to increase. In 2016-17, Indigenous adults accounted for 27 per cent of admissions to federal correctional services, compared to 23.2 per cent in 2013. Over-represented in federal corrections facilities, Indigenous peoples make up 20 per cent of the total imprisoned population even though they only comprise 4.9 per cent of the Canadian population. Indigenous youth are also overrepresented in the correctional system. They account for 46 per cent of admissions in 2016-17, while representing 8 per cent of the Canadian youth population.

Several social factors have contributed to the over-representation of Indigenous people in the justice system. A history comprised of dislocation from traditional communities, disadvantage, discrimination, forced assimilation including the effects of the residential school system, poverty, issues of substance abuse and victimization, and loss of cultural and spiritual identity are all contributing factors. ( See also  PTSD: Intergenerational Transmission of Trauma .)

In a landmark Supreme Court of Canada decision, the Gladue case in 1999 advised that lower courts should consider an Indigenous offender’s background and make sentencing decisions accordingly, based on section 718.2 (e) of the Criminal Code . To date, many Indigenous-directed alternatives to incarceration in correctional facilities are being developed, including healing and sentencing circles. However, there are still many questions surrounding the unfair and inhumane treatment of Indigenous peoples in modern jails.

Because existing police forces are not always aware of the cultural differences and needs of Indigenous communities, Indigenous people began to develop their own police forces in the 1970s and 1980s. Indigenous police recruitment programs helped the RCMP and other police forces to add Indigenous constables to their staffs. In 1991, the federal government introduced the First Nations Policing Policy to meet the needs of Indigenous communities. While 62 per cent of officers in First Nations police services identified as Indigenous in 2018, Indigenous officers still only represent 4 per cent of police officers in Canada.

Indigenous Children and Families

In 2016, 60.1 per cent of Indigenous children under the age of four lived in a two-parent household and 34 per cent lived in a one-parent household. Comparatively, 86.2 per cent of non-Indigenous children lived in a two-parent household and 13 per cent lived with one parent.

Indigenous children are more likely to live in homes with grandparents. Among the Indigenous population in 2016, 21 per cent of First Nations , 11 per cent of Métis and 23 per cent of Inuit children under the age of four lived with at least one grandparent. Among the non-Indigenous population, 10 per cent of children aged four and under lived with at least one grandparent.

Since the 1960s, a large number of Indigenous children have been placed in care by social agencies. ( See also  Sixties Scoop .) In 2016, Indigenous children made up nearly half of all children in foster care in Canada, even though they only made up 7 per cent of children in the country.

Improving Social Conditions

Progress with respect to social conditions is being achieved. However, the gaps that persist between the social and economic conditions of Indigenous people in Canada and those of the general Canadian population continue to pose challenges. Areas of particular social concern include housing , employment, education , health , justice and family and cultural growth. Many communities are implementing community-based strategies stressing the importance of history and culture; governance, culture and spirituality ; unique qualities and values; the link between self-government and economic development; and the role and importance of traditional economies.

Inuit Collection

Indigenous Peoples Collection

Métis Collection

• socioeconomic issues
• Indigenous Peoples
• social conditions

Further Reading

Heather A. Howard and ‎Craig Proulx, Aboriginal Peoples in Canadian Cities: Transformations and Continuities (2011).

David Long and Olive Dickason, Visions of the Heart: Canadian Aboriginal Issues , 3rd ed. (originally published in 1996; 2016).

Marie Battiste, Reclaiming Indigenous Voice and Vision (2011).

Margo Greenwood, Sarah De Leeuw, Nicole Marie Lindsay and Charlotte Reading, eds., Determinants of Indigenous Peoples’ Health in Canada (2015). 

External Links

Health Canada  First Nations and Inuit Health

CBC News  Missing and Murdered: The Unsolved Cases of Indigenous Women and Girls

Government of Canada  Budget 2016 Highlights – Indigenous and Northern Investments

Children and Youth: Crime Prevention Through Social Development  “Social Challenges: The Well-being of Aboriginal People”

Truth and Reconciliation Commission  Learn more about TRC and the ongoing impacts of residential schools on Indigenous cultures and societies

Toronto Star  “Attawapiskat Shacks Put First Nations Housing Crisis into Perspective,” by Colin Perkel

Recommended

Education of indigenous peoples in canada, residential schools in canada, indigenous women and the franchise.

Home / Essay Samples / Sociology / Identity / Social Inequality

Social Inequality Essay Examples

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