Canada’s Middle Class—Forever Further Behind? (original) (raw)

Oxford Scholarship Online, 2018

Abstract

This chapter highlights Canada’s distinctive trajectory of inequality and living standards. Inequality rose markedly because real incomes grew strongly at the very top but stagnated for most of the rest of the income distribution until the resource-led boom of the 2000s. The importance of macroeconomic policy is brought out, in particular the role of monetary policy in choking off growth in order to keep inflation low, at the cost of substantial unemployment. The growth in incomes at the very top may be underestimated by the available estimates, while the weakening of redistribution via the tax and transfer systems has accentuated the trend to greater inequality. The consequences of a sustained ‘squeeze’ on middle incomes and living standards are spelled out and the implications for the future, in the absence of a major shift in the growth strategy, are discussed.

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