Introduction
Recent public attention has focused on income and wealth inequality in Canada. Policymakers are being challenged to address the widening wealth disparity. Income and wealth inequality is the uneven distribution of income and wealth among households and individuals. Numerous studies have shown that these inequities continue to harm Canada. Thomas et al. (2019) debate Canadian political economy change and continuity and the need to address income and wealth inequality. Tencer (2018) claims that widening wealth inequalities threaten Canada’s stability. Policy reforms to reduce income and wealth inequality are supported by empirical data. Lim (2019) found that race income disparity in Canada scarcely improved in the decade preceding 2015. Davies and Di Matteo (2021) examine long-term wealth disparity in the world, revealing Canada’s wealth discrepancies. Income and wealth inequality in Canada are major economic and social issues. The present trend threatens social stability and economic prosperity. Thus, policy reforms are needed. This article will explore current policies and practices and give evidence for alternate income and wealth distribution in Canada.
Scope of Income and Wealth inequalities: A global perspective
There has always been a wealth and income gap, both globally and inside individual countries. Wealth inequality refers to the unequal distribution of assets such as money and stocks (Davies & Di Matteo, 2021). Income inequality refers to the disparity in the distribution of wealth among individuals or organizations (Lim, 2019). Laws and economic institutions have played a significant role in the perpetuation of income and wealth disparities throughout history. According to Polacko’s (2021) research on the topic of income inequality, the disparity has changed throughout the years as a result of variables, including globalization, technological advancements, and shifts in the labor market.
One of the earliest theories of capitalism to address the problems of wealth accumulation and income inequality was Karl Marx’s. Marx argued that since a limited number of capitalists would possess the means of production, the bourgeoisie and working class would have differing amounts of wealth and income under capitalism (Polacko, 2021). Reducing economic inequality was the aim of the growth of the 20th-century social security system. However, income and wealth disparity started to rise again in the 1980s as neoliberalism gained popularity. Zhu et al.’s (2023) analysis examines the impact of neoliberal policies on inequality, paying specific attention to how less government intervention and market deregulation affect inequality. Neoliberalization theory claims that these activities have increased inequality and concentrated wealth in the hands of a select few.
Image: Marxism capitalism theory
Globalization has led to an increase in the wealth and income gap. Trade and investment have benefited some businesses and people while hurting others. Thomas et al. (2019) claim that changes in work patterns and compensation brought about by globalization have resulted in economic inequality. Racial and gender differences have also made wealth and income inequality worse. Lim (2019) examines the persistence of income inequality and racial inequities in Canada. This illustrates how structural obstacles prevent certain people from taking advantage of economic possibilities. The gender wage gap is another thing fueling economic inequality. According to Thomas et al. (2019), men and women in Canada are compensated differently for performing the same amount of labor. This mismatch is a result of both employment discrimination against women and social expectations. 
Image: Global inequality trends
As a result, the idea of wealth disparity has attracted attention from all across the globe. According to Davies and Di Matteo’s (2021) analysis of long-term wealth disparity from a global viewpoint, Canada has more wealth inequality than other affluent nations. This illustrates how a very small group of individuals own the bulk of the wealth. To understand global income and wealth disparities, one must also grasp issues related to governance and economic growth. The relationship between economic development, governance, and wealth inequality is examined by Islam and McGillivray (2020). They contend that wide disparities in wealth might obstruct economic expansion, resulting in slower development and greater rates of poverty. This illustrates how crucial governance frameworks and institutions are to guarantee fair resource allocation.
Current situation in Canada
The gap between the rich and the poor has been growing, according to research and data, which has made wealth and income inequality in Canada a major problem in recent years. Priority should be given to understanding the scope of wealth and income inequality in Canada. Davies and Di Matteo (2021) contend that there is now more wealth inequality in Canada. They find that, according to Statistics Canada, the wealthiest 1% of Canadians had 25.6% of the country’s total wealth in 2016, a sharp increase from 13.5% in 1999. This demonstrates how money is concentrated among a small number of individuals. In a similar vein, Tencer (2018) highlights Canada’s growing wealth disparities. Tencer uses economist Lars Osberg to explain why the richest 1% of Canadian households witnessed an increase in their share of the country’s overall wealth, from 19.3% in 1999 to 25.6% in 2012. These numbers demonstrate the nation’s richest citizens as a concentrated group.
Image: Comparison of income inequality in Canada and the US.
Studies have also looked at the economic gaps in Canada and how they affect various demographics. The enduring racist income disparity gap is addressed by Lim (2019). According to Lim’s analysis of 2016 census data, raced persons in Canada had an average income of $52,100, which is far lower than the average income of $71,300 for non-racialized individuals. According to these numbers, there is a huge disparity in income between people of different races in the nation. The wage disparity between men and women is another facet of economic inequality. In their 2019 study, Thomas et al. shed light on the gender pay disparity that remains in Canada. They point out that women earned 69 cents for every dollar that males made, based on statistics from the 2016 census. The data shows that there is a large wage gap between the sexes.
Apart from these discrepancies, the issue of economic mobility must also be considered. Dean and Geloso’s (2022) research on income mobility in Canadian provinces from 1982 to 2018 reveals notable regional differences. They contend that factors like labor market regulation and the size of the government might significantly improve economic freedom. This implies that although certain Canadian places may provide more prospects for people to climb the economic ladder, others may encounter noteworthy obstacles. Additionally, Islam and McGillivray (2020) examine the connection between increasing economic growth and wealth disparity. They contend that widening wealth disparities might impede economic growth as a whole. Citing several research, they demonstrate the relationship between excessive income disparity and lesser social mobility, slower economic development, and higher rates of poverty. This study not only emphasizes the detrimental effects of wealth inequality but also the need for legislative reforms.
Image: Increasing Inequality Age.
Zhu et al. (2023) examine housing inequalities in Canada’s main cities from 1981 to 2016 in their research. The study identifies significant barriers to accessibility by analyzing the impact of neo-liberalization on housing disparities. Zhu et al. (2023) state that one of the biggest issues facing the economy is the growing disparity between the incomes of the richest and the rest of the population in regard to housing costs. The problem of income disparity within households has to be addressed as part of larger initiatives to reduce wealth and income gaps. By analyzing the implementation of Canada’s basic income program, Tedds et al. (2020) provide light on possible policy responses. Both the statistical backing and the theoretical underpinnings of a basic income program are presented in this research. A universal basic income may guarantee that everyone has an equal shot at success, give chances to everyone, and even transform the way the economically disadvantaged are supported.
Impact of Growing Wealth and Income Inequality on Canada’s Economy and Citizens
Many issues have arisen as a result of Canada’s growing income gap, but the most critical is the country’s shaky economy. Tencer (2018) argues that a tiny group of individuals now control the majority of the economy due to the widening wealth gap. A few of very rich people and businesses have an outsized amount of influence on economic policy, investment, and decision-making. The economic policies that emerge from such a concentration of wealth can end up serving the wealthy at the expense of the middle class and the poor. Less spending by the bulk of the population due to wealth concentration could slow down economic development. Dean and Geloso (2022) found that regions with more economic freedom had higher income mobility. But when most people can’t afford to spend as much, demand for products and services drops. Reduced economic growth may be a hindrance to national development if budget cuts of this nature were implemented.
Economic instability might result from unequal investment patterns connected to growing income inequality. Thomas et al. (2019) claim that historical trends and policy decisions have an impact on how investments are distributed across different industries. High levels of inequality may result from investments that put wealthy-serving businesses ahead of other sectors that are essential to the development of the economy as a whole. This lopsided investment pattern may inhibit economic innovation and variety, making it more difficult for the nation to adapt to changing circumstances in the global economy. Income and wealth inequality may be the source of financial market vulnerabilities. The concentration of wealth often promotes financial speculation and riskier investment techniques. Islam and McGillivray (2020) highlight the nuanced connection between economic growth and wealth inequality. However, since financial markets are more vulnerable to speculative bubbles and market volatility, concentrated wealth poses a greater risk to investors and the whole economy.
In a country like Canada, where income inequality is on the increase, many individuals may find it more difficult to climb the economic ladder (Dean & Geloso, 2022). Provinces with more economic freedom tend to have higher income mobility, therefore it might be more challenging for individuals to rise socially in areas with a wider wealth gap. Fewer prospects for upward mobility lead to income inequality and weaker economic development in the long run. Starting with economic inequality and culminating in occupational segregation, the inability to climb the social ladder is a vicious cycle. Zhu et al. (2023) suggest that a concentration of population might occur in areas where affordable housing is scarce. It becomes more challenging for those residing in these areas to advance economically due to the potential scarcity of employment and professional opportunities.
Declining social mobility weakens the social fabric of Canadian society. Long-term socioeconomic disparities may lead to communities that are segregated and have little opportunities for social engagement among varied groups (Lim, 2019). These divisions, which break the social links necessary for these sorts of possibilities, may make it harder for individuals from disadvantaged backgrounds to network, support one another, and search for better prospects. The disparities in resource accessibility are amplified by social mobility restrictions resulting from economic inequality. For people with lesser means, getting access to needs like stable housing and healthcare may be challenging. Polacko (2021) examined the causes and consequences of economic inequality. The findings suggest that variations in resource accessibility may exacerbate a cycle of poverty and limit chances for both individual and collective development.
Inequality in wealth and income affects people’s level of life and their capacity to earn a livelihood. The gender wage gap causes economic inequality, according to Thomas et al. (2019). A prolonged gender pay disparity has a detrimental effect on people’s financial stability, their ability to accumulate money, and their standard of living generally. According to Lim (2019), who emphasizes the racialized income inequality gap, colored people have lower average incomes. Because of this income gap, racialized people’s opportunities and resources are diminished, and their quality of life is worse. Poverty and economic inequality may also affect people’s ability to get the help they need and the opportunity they deserve. According to Zhu et al. (2023), there is a widening gap in the incomes of urban Canadians when it comes to housing costs. Housing prices might rise due to wealth concentration, making it harder for low-income families to afford. Housing inadequacy exacerbates inequality and makes social mobility harder.
Image: Low-earning households spend less
Education is another area where disparities in wealth and income have a big impact. Income inequality and intergenerational mobility are connected (Davies & Di Matteo, 2021). Wealthier individuals may be able to provide their kids with better educational opportunities, such as tutoring, private schooling, and extracurricular activities, which may raise their prospects of finishing school and becoming successful adults. On the other hand, children from lower-income homes are at a disadvantage as they have less access to educational opportunities and resources. This keeps the cycle of inequality going by limiting economic prospects and impeding social mobility. Public health and well-being are also impacted by differences in wealth and income. Unequal wealth and income distribution may lead to disparities in healthcare outcomes and access. Individuals with lower incomes may have barriers to accessing healthcare services, potentially resulting in inferior health outcomes and overall well-being. This is particularly true in impoverished communities with higher rates of poverty and limited access to healthcare services (Thomas et al., 2019).
New policy Recommendations
Progressive Taxation Policies:
Putting in place a progressive tax structure is a crucial step in reducing income and wealth inequality. Under progressive taxation, which redistributes resources and promotes economic equality, higher tax rates are inferred for individuals with higher earnings (Davies & Di Matteo, 2021). To implement this proposal, the Canadian government should focus on altering tax rates and brackets to establish a more egalitarian structure. Tax policy should also aim to lower tax evasion and avoidance in order to increase systemic fairness and efficacy.
Strengthening Social Safety Nets:
Raising the minimum wage, enhancing existing income support programs, and creating all-encompassing social assistance systems are all suggestions as possible solutions. Tedds et al. (2020) suggest that in order to achieve a guaranteed minimum income and to end poverty, a program of basic income may be established. For these policies to work, the government has to pay for them enough, enforce them strictly, and remove any obstacles to employment. Thomas et al. (2019) highlight social programs as a way to lessen the impact of inequality. It is only fair that efforts to strengthen social safety nets disproportionately benefit those with lower incomes. This includes increasing the number of low-cost housing units, guaranteeing that social assistance programs can cover the essentials for low-income families, and improving the accessibility and appropriateness of unemployment benefits.
Education Accessibility Reforms:
Investing in education and skill development will lower income and wealth disparities and enable individuals to get better-paying employment. Income mobility is facilitated by skill development and economic independence (Dean & Geloso, 2022). The government should increase funding for education at all levels, from preschool to higher education, in order to implement this approach and ensure that everyone has access to high-quality education. Moreover, expanding opportunities for career training and lifelong learning to meet the demands of the labor market might enhance skill development and provide possibilities for upward mobility. In order to break the cycle of sluggish upward mobility, education is essential, according to Lim’s (2019) study on the racialized income gap. Policies should be focused on reducing educational inequalities by providing money for schools in poor neighborhoods, providing financial assistance and scholarships, and implementing measures that enhance fair educational opportunities.
Promoting Gender and Racial Equality:
Lessening economic disparity requires measures that promote gender and racial equality. There have to be targeted measures to narrow the racial income disparity gap in Canada, as Lim (2019) points out. Abolition of discrimination, equal compensation for equal work, and access to extraordinary possibilities should be top policy priorities. Reducing inequality requires programs that target disadvantaged populations, pay equity laws, and affirmative action. Government, companies, and civil society groups must work closely together throughout implementation to overcome any opposition or reaction and assure compliance.
Progressive Employment Policies:
Creating progressive employment policies has two basic objectives: improving working conditions for workers and ensuring equal sharing of the benefits of economic growth. This means doing things like supporting labor unions, raising the minimum wage, and pushing for moral hiring procedures. Dean and Geloso’s (2022) study emphasizes the connection between economic freedom, income mobility, and employment policy. Governments should consider raising the minimum wage to a level that reflects the cost of living in order to provide workers with a fair and decent income. Employees who have the power to negotiate for better wages and working conditions may do so by supporting labor unions. To provide financial stability and job security for all workers, measures that address precarious employment—such as contract or part-time work—must be implemented.
Affordable Housing Initiatives:
Housing disparities create wealth inequalities. Affordable housing schemes increase socioeconomic diversity while decreasing real estate wealth by making quality houses accessible to everybody. Zhu et al.’s (2023) research on neoliberalism and housing disparities focuses on housing policy. Governments should provide affordable housing, control rents, and support low-income households. Zoning restrictions should be changed to encourage affordable housing in diverse areas and lessen economic disparities.
Summary and Conclusions
This comprehensive research examined the pressing issue of growing wealth and income inequality in Canada, providing a detailed examination supported by insights from several trustworthy sources. This research provides a nuanced knowledge of the complex difficulties facing Canadian society by carefully navigating theoretical foundations, historical perspectives, and international comparisons. Theoretical frameworks built from sources and real data support the key results. The research demonstrates the detrimental effects of income inequality on housing availability, social mobility, economic stability, health outcomes, and people’s overall well-being. The study emphasizes the interconnectivity of these challenges and the need for targeted policy interventions. Among the recommendations provided for closing the wealth and income gap are progressive employment policies, affordable housing initiatives, educational reforms, progressive taxation, and bolstering the social safety net. The paper’s conclusion highlights the need for social justice, evidence-based policies, and ongoing evaluation in order to create a more just and sustainable Canadian society.
References
Davies, J. B., & Di Matteo, L. (2021). Long run Canadian wealth inequality in international context. Review of Income and Wealth, 67(1), 134-164. https://doi.org/10.1111/roiw.12453
Dean, J., & Geloso, V. (2022). Economic freedom improves income mobility: evidence from Canadian provinces, 1982–2018. Journal of Institutional Economics, 18(5), 807-826. https://doi.org/10.1017/S1744137421000850
Islam, M. R., & McGillivray, M. (2020). Wealth inequality, governance, and economic growth. Economic Modelling, 88, 1-13. https://doi.org/10.1016/j.econmod.2019.06.017
Lim, J. (2019, December 9). Racialized income inequality gap barely budged in decade before 2015, study finds. https://www.ipolitics.ca/news/racialized-income-inequality-gap-barely-budged-in-decade-before-2015-study-finds
Polacko, M. (2021). Causes and consequences of income inequality–an overview. Statistics, Politics and Policy, 12(2), 341-357. https://www.degruyter.com/document/doi/10.1515/spp-2021-0017/html
Tedds, L. M., Crisan, D., & Petit, G. (2020). Basic income in Canada: Principles and design features. Available at SSRN 3781834. https://dx.doi.org/10.2139/ssrn.3781834
Tencer, D. (2018, September 11). Relentlessly rising wealth disparity threatens to destabilize Canada. Huffington Post. https://www.huffpost.com/archive/ca/entry/income-inequality-lars-osberg-book-canada_ca_5cd56683e4b07bc72977c1db
Thomas, M. P., Vosko, L. F., Fanelli, C., & Lyubchenko, O. (Eds.). (2019). Change and continuity: Canadian political economy in the new millennium. McGill-Queen’s University Press.
Zhu, Y., Yuan, Y., Gu, J., & Fu, Q. (2023). Neoliberalization and inequality: disparities in access to affordable housing in urban Canada 1981–2016. Housing Studies, 38(10), 1860-1887. https://doi.org/10.1080/02673037.2021.2004093
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