【NON-p】econ219--THE RISE OF CANADA’S..r

Welcome to canadas neo gilded age 2 simon kuznets

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Unformatted text preview: d, the rise of the rich has been unstoppable. Welcome to Canada’s neo-gilded age. 2 Simon Kuznets, “Economic Growth and Income Inequality”, American Economic Review, 1955, 45 (1), pp.1–28. 3 Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998”, Quarterly Journal of Economics, 2003, 118(1), pp. 1–39. 4 Emmanuel Saez and Michael Veall, “The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence”, American Economic Review, 2005, 95(3), pp. 831–849. It reviewed trends in high income f rom 1920 to 2000 in Canada and compared to the U.S., based on tax data going back to 1920. 6 growing gap project Who Gains from Growth? for decades, the kuznets theory gave heft to the aphorism “a rising tide l ifts all boats”. But in recent decades, no such phenomenon has occurred — the gains from growth have become more unevenly distributed. Inflation-adjusted data from Saez and Veall’s 2005 study shows those at the top always did better t han those in the middle. But, on average, incomes in Canada barely grew over t he course of a generation, making the gains for the richest 1% look more extravagant than ever.5 The original Saez and Veall data set ended in 2000, when Canada’s surge in economic growth had really just taken hold. Through other data sources we know that between 1997 and 2007 Canada was a job juggernaut, creating more employment than any other G7 nation. The 1980s and 1990s were decades plagued by two recessions and long periods of jobless recovery. Updating the data post-2000 could show that the trajectory traced by Saez and Veall was an aberration, the unhappy result of slow and uneven growth, but updated and unpublished data from Michael Veall 6 reveal that isn’t the case. Much like in the Gilded Age, the richest 1% of Canadians harvested the lion’s share of financial gains from both 5 Unless otherwise noted, all graphics and tables in this document are drawn from or calculated from data provided in the tables which supported the Saez and Veall (2005) study, covering the period 1920 to 2000; a nd the updated, unpublished Canadian data provided by Veall, which run from 1982 to 2007. All data are d rawn from tax files. 6 In April 2009 Emmanuel Saez released US results updated to 2007. Michael Veall presented his unpublished updates for Canada at the Canadian Economic Association Annual Meetings in Québec City, Québec on May 29, 2010, and has kindly made the data available. The data are based on a 20% sample of tax files, t he LAD data base (Longitudinal Administrative Data) of Statistics Canada. This data set runs from 1982 to 2007. The methodology has changed but the results for the overlapping years are similar. the rise of canada’s richest 1 % 7 chart 1 Compared to Earlier Era, Growth in Average Incomes Has Collapsed, While Incomes at the Top Continue to Soar 300% Average Income Income of Top 1% 250% 200% 150% 100% 50% 0% 1946–1976 1977–2000 chart 2 Share of Income Gains Captured by Top 1% Canada, 1920–2007 35% Old Series New Series 30% 25% 20% 15% 10% 5% 0% 1920–28 1928–47 1947–57 1957–67 1967–77 1977–87 1987–97 1997–2007 robust and weak economic growth. Between 1997 and 2007, just before the global economic meltdown quelled Canada’s roaring economy, the richest 1% of Canadians — the 246,000 privileged few who took home $169,300 or more — had laid claim to almost a third (31.8%) of the decade’s growth in total income. It was not always this way. From the late-1950s to the late-1960s, a similar period of strong and sustained growth, the richest 1% of Canadians only took 8% of the growth in total income. Nothing in the course of the previous century resembles what has occurred in the last generation. 8 growing gap project The Great U-Turn: Reversing The Trend Toward Greater Equality the charts that follow reveal a clear pattern emerging over time, which becomes more accentuated higher up the income ladder. This pattern has been dubbed the Great U-Turn of our time, reversing the trend toward greater equality that characterized most of the 20th century. The 1920s and 1930s: Boom Times or Tough Times, Rising Inequality The share of income held by Canada’s elite dropped in the early-1920s because other p...
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