A theoretical and empirical analysis of income distribution and inequality: Canada, 1971-1986.

This study focuses on the measurement and factors underlying the unequal dispersion of income among individuals. The first part of this study is devoted to a theoretical discussion of inequality and a survey of income distribution theories. In the methodological part it is indicated that, for a veriety of reasons, it is desirable to use a well fitted model to describe the observed income distribution in order to analyse the extent and sources of inequality. Such a model is proposed as a tool to describe the observed income distribution of Canada. The robustness of the specified model is supported by several goodness of fit indicators including the comparative analysis of different measures of income inequality in parametric and non-parametric forms. By using data from three Canadian censuses (1971, 1981 and 1986), the distributions of total annual money income and of wages and salaries among Canadian males and females are examined. The study is carried out for different levels of education and goods and service producing occupations and industries too. The processes of income polarization and the decline of the middle class are also studied in the Canadian context. Statistical synthesis of the findings indicates that inequality in total income and earnings has increased. Concerning sex, it is shown that inequality among the female population was larger than inequality within the male population; however the income differentials between males and females declined over time showing a narrowing trend of the income gap by sex. In terms of eduction, generally, income inquality among individuals with elementary schooling is greater than for individuals with secondary schooling, and university graduates have a lower level of inequality than the two other educational groups. Income inequality in service producing sectors is greater than in goods producing sectors. The study indicates that the change in inequality is the outcome of several socioeconomic, technological, institutional and demographical processes. By discussing some of the possible explanations for the Canadian income inequality during the 1971-1986 period, it is found that among the main determinants we identify (i) the industrial occupational employment shift from goods to services, (ii) the increase in part-time work, and (iii) increased female labour force participation