In this article, the Financial Post’s William Watson explores a study by Miles Corak, Marie Connolly, and Catherine Haeck on the intergenerational transmission of income inequality in Canada and the United States.


The study’s income statistics don’t cover all Canadians and Americans, as you might prefer, but are for kids born in 1980 and 1982 and their parents. And the numbers I’ve quoted are those comparing the incomes of the Canadian and American parents in the 1990s. How the kids were doing in the early 2010s actually reflects more favourably on Canada: 12.5 per cent of them — one in eight — would have qualified to be in the top U.S. quintile. And to get into the top one per cent in the U.S. required only 46 per cent as much money as in Canada, not three times as much. Of course, early in the 2010s, people born in 1980 or 1982 were just getting established in the labour market. So that 46 per cent could easily rise as their careers went on.

How rich or poor Canadians are compared to Americans isn’t the study’s main point, but still: It’s hard not to be taken aback by such a stark demonstration of how far ahead the top echelon of Americans is.

Watson focused on the top and bottom quintiles but the study actually concludes that when you concentrate on the middle three quintiles — the middle-class quintiles? — “there is a good deal of intergenerational mobility for a large segment of the population in these two countries.”

The bottom line: Canadians are poorer than Americans but they have a better chance of moving up. Or down. I wonder how many Canadians, if presented with the true numbers, would vote for that trade-off.

See the entire article in the Financial Post

Related Research: Intergenerational Mobility Between and Within Canada and the United States