Changing Income Inequality and Immigration in Canada, 1980­1995

While there is a general consensus that income inequality has increased in most developed countries over the last two decades, the analytical focus has been on the national scale. However, these increases in inequality have not been uniform across different segments of society, either in terms of social groups or geographic region. In particular, the high levels of immigration to metropolitan Canada have contributed to growing inequality. Using individual household income data from the 1981, 1986, 1991, and 1996 censuses, this paper identifies the role of immigration and its differential impact on metropolitan and non-metropolitan areas. The impacts became more prominent during the first half of the 1990s when immigration remained high yet the economy slowed. The evidence suggests that the overall impact of immigration is a relatively short-run phenomenon as recent immigrants take time to adjust to the labour market. If recent immigrants are excluded, inequality is still increasing, but at a slower rate, especially in the largest metropolitan areas.