VANCOUVER, BC-The "gap" between the economic well-being of
rich and poor Canadians may not be growing, says a new,
peer-reviewed report from independent research organization the
Past attempts to measure economic inequality using only
reported incomes have ignored other factors that contribute to
the real standard of living, Professor Chris Sarlo writes in
The Economic Well-Being of Canadians: Is there a Growing
"There is a commonly held notion that the rich are always
getting richer and the poor poorer," said Sarlo, an associate
professor of economics at Nipissing University and Fraser
Institute senior fellow.
"However, most reports of a 'growing gap' in economic
well-being between the rich and poor are based exclusively on
reported incomes, ignoring other factors that help define one's
standard of living."
While the study estimates that the so-called "gap" between
the rich and poor, based on Statistics Canada survey and
tax-filer data on reported incomes, rose about nine per cent
from 1969 to 2004, Sarlo cautions that the magnitude of hidden
and underreported income as represented by the so-called
"underground economy" can distort the results, making the
distribution of incomes appear more unequal than is actually
The study quotes a 1999 report from the Auditor General of
Canada suggesting that the Canadian underground economy could
amount to $50 billion or more every year. The author also cites
a 2002 study from researchers Giles and Tedds who estimate the
size of the underground economy to be larger still, with
Canadians concealing the equivalent of about 15 or 16 per cent
of GDP through a variety of means every year.
"That number is likely to grow with increases in
self-employment and the expansion of electronic commerce," said
Sarlo, who points to the repair and renovation trade, auto
repair business, and hospitality industry, as well as a range
of illegal activities, as some of the key players in the
The report also suggests that sociodemographic changes such
as a greater proportion of seniors, more students in
post-secondary institutions, more single parents, and more
two-income families could also help explain the estimated eight
or nine per cent rise in income inequality from 1969 to
In addition to questioning the reliability of reported
incomes, the study notes that other factors which help define
the living standards of Canadians have not grown significantly
more unequal since 1969.
In terms of consumption, the study shows that the top 10 per
cent of income earners enjoyed a standard of living about 3.85
times that of the bottom 10 per cent, and that this ratio was
stable over the 35-year period studied.
Additionally, the study finds that ownership of appliances
and electronics which enhance well-being does not the support
the "growing gap" hypothesis.
Sarlo points out that, on average, Canada's lowest income
earners are obtaining entertainment and labour-saving devices
more rapidly than the wealthiest households.
"We're seeing the poorest Canadians acquire air
conditioners, washing machines, computers, and other helpful
products at faster rates than the wealthy," Sarlo said.
And the distribution of wealth in Canadian households has
been quite stable since 1984, when Statistics Canada first
conducted a survey of the net worth of Canadians.
Sarlo says the report offers a unique perspective by
examining the issue of economic and material well-being more
broadly than most research, which tends to focus almost
entirely on income inequality.