Labour Market Matters - July 2014

Recent trends in inequality and poverty across Western Canada, a region known for its energy resources, seem to correspond to movements in energy prices, with much of the rise in inequality and decline in poverty taking place during the energy boom from the mid-1990s to the mid-2000s. These trends had previously been more pronounced in the provinces containing greater energy resources as compared to the provinces with fewer of these resources. The economic benefits from an energy boom could potentially alter the aggregates of inequality and poverty, depending on how these gains are distributed across the distribution. In a CLSRN paper entitled “The Distributional Impacts of an Energy Boom in Western Canada†(CLSRN Working Paper no. 137), Joseph Marchand (University of Alberta) investigates the relationship between inequality, poverty, and energy booms in Canada, by specifically focusing on the local labor markets of the western region. Overall, the evidence indicates that inequality modestly increased and poverty drastically decreased due to the recent boom. However, there were also a few notable cases where inequality slightly declined and poverty modestly increased. Growth in income inequality has been surprisingly low in Canada over the last fifteen years. But, does this mean that inequality in material well-being has been flat? CLSRN affiliates Sam Norris (Northwestern University) and Krishna Pendakur (Simon Fraser University) find evidence to the contrary in their new study, “Consumption Inequality in Canada 1997 to 2009†(CLSRN Working Paper no. 138). They show that although inequality in household income has been essentially flat over the period 1997-2009, inequality in household consumption has grown moderately over the same timeframe. Since consumption is closer to material well-being than income, this suggests that there has been an important increase in economic inequality.