A Surge in Wealth Inequality

There was a fair amount of media coverage of the new data  on assets and debt from the 2005 Survey of Financial Security released by Stats Can last week (Daily, December 7); less so of the very useful companion research paper on wealth inequality by StatsCan researchers Morissette and Zhang published in the latest issue of Perspectives.
http://www.statcan.ca/english/freepub/75-001-XIE/11206/high-1.htm

As noted in the original release, wealth inequality measured by quintile shares – surprise, surprise – increased from 1999 to 2005. The share of net assets held by the top 20% of families rose from to 68.5% to 69.2% over this period. (This seems to include registered pension plan assets.)  The small wealth share of the bottom 60% fell, from 11.5% to just 10.8%.

Slightly buried in the new paper is evidence that wealth inequality is  increasing at an even faster rate than was the case in the 1990s,  and that the distribution is becoming ever more skewed to the very affluent.

The paper (Table 1) shows wealth shares of families for different parts of the distribution, for 1984, 1999, and 2005. Slightly misleadingly, Chart C “The Distribution of Wealth Has Again Become More Unequal” shows a sharp increase in the gini and the wealth share of the top 10% of families since 1984.  Why do I say “slightly misleadingly”? Not becasue of lack of  a sharp trend line up which is clearly shown, but because the horizontal scale is not adjusted for the number of years between surveys. In fact, wealth inequality rose by almost as much between the 1999 and 2005 surveys (six years) as it did between the 1984 and 1999 surveys (15 years.)

The wealth share of the top 10% (this time excluding registered pension plan assets) rose from 51.8% in 1984, to 55.7% in 1999, to 58.2% in 2005.  The annual rate of increase of the share of the top 10% rose from .26 percentage points per year, 1984-to 1999, to .41 percentage points per year, 1999 to 2005.  Median wealth of the top 10% of households is now over $1 Million ($1,194,000.)

Calculations from the data in the Table further show that the wealth share of the top 1% grew twice as fast between 1999 and 2005 as did the share of the top decile minus the top 1%. Of the 2.5 percentage point increase in the wealth share of the top 10%, 0.5 percentage points or one fifth went to the top 1%. (However, these sample surveys generally under-state the share of the very top since their wealth far eclipses their numbers.)

4 comments

  • The link you have provided seems to be pointing to the wrong place.

  • I’ve checked the link and it seems right but only if you go through Statscan’s menu system. Strange.

    The link again:
    http://www.statcan.ca/english/freepub/75-001-XIE/11206/high-1.htm

    The link to the pdf:
    http://www.statcan.ca/english/freepub/75-001-XIE/11206/art-1.pdf

    And if neither of those works, the link to the Daily where you can navigate your way to the right place:
    http://www.statcan.ca/Daily/English/061213/d061213c.htm

  • NOTE to Marc:

    What canadianobserver meant is that clicking on the StatCan link in your blog takes you to a 404 (dead link) error page. If you place your cursor over that link in your article and look at the status bar at the bottom of your page, you’ll note that the hidden link that you created to that page has an extra “http//” in it.

    Because new visitors to your site arrive at the top of your page, they’ll find only the broken link and not canadianobserver’s comment and your reply with the correct link.

    If they don’t have Netsavvy, they might just quit right there and move on to another site. If they do have Netsavvy, they might spend 10 minutes finding the problem and writing up a long-winded post on how to fix said problem, like I just did…
    As author, you can repair that by selecting that message and editing the link to fix it.

    In Solidarity,
    Gilles

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