Differences in people’s age explains most wealth inequality in Canada

Christopher A. Sarlo. He is Professor of Economics at Nipissing University.

• Wealth inequality in Canada is little changed over the past five decades, according to data from Statistics Canada.
• The top 10% of households in 1970 held 53.3% of total wealth; in 2019, they held 47.8%.
• Age explains much of the variation in wealth, confirming earlier findings. This is a natural phenomenon in which younger people accumulate debt, begin paying it down as they enter the workforce, and then begin to accumulate wealth over time.
• In 2019, for instance, 77.3% of households in the top 20% for wealth were aged 50 or higher; households under 50 made up 64.8% of the bottom 20% of households.
• The age pattern of average wealth holdings is found to be hill-shaped, with net worth peaking at $1.17 million for those aged 60 to 64 in 2019.
• Reviews of Statistics Canada’s survey data indicate it is likely missing key information about wealth for households in the top 1%. Adjustments made to include that information suggest that wealth inequality may be increasing.
• However, Statistics Canada’s survey data also excludes other kinds of wealth such as the present value of public retirement programs that, if included, are likely to show wealth inequality declining.
• Overall, it is not possible to conclude anything definitively about the level or change in wealth inequality in Canada.
• Much of the controversy about wealth inequality stems from a failure to distinguish between illegitimate and legitimate sources of wealth—namely the differences between ill-gotten gains from theft, fraud, corruption, cronyism, and so on and wealth produced by providing goods and services demanded by consumers.