Neighbourhood Income Inequality in Canadian Cities.
Written by W.H. Chen, John Myles and Garnett Picot. Published by the Canadian Labour Market and Skills Researcher Network. 2011.
The purpose of this study is to inform city and social planning professionals about the potential causes and consequences of income disparity between neighborhoods in Canadian cities. This study utilized longitudinal (1980-2005) post-tax income data from the 8 largest metropolitan areas in Canada (Ottawa-Gatineau area, Quebec City, Montreal, Toronto, Winnipeg, Edmonton, Calgary, Vancouver).
Researchers examined two potential reasons for why income disparity exists between Canadian neighborhoods. The first hypothesis is that families with similar incomes tend to cluster together because of labor market trends, such as location of high or low priced housing. The other possible cause of income disparity between neighbourhoods is that higher income families experience increases in their income, while low income families tend to experience income stagnation or decreases in their earnings over time.
Findings in the Report:
Researchers found that income disparity between rich and poor neighbourhoods that were studied over the past 25 years was almost entirely because of differences in the growth in earnings between high and low income families. Higher income families in the 8 Canadian cities enjoyed a larger increase in overall income compared to lower income families. The income of poorer families tended to stagnate, or increase at a much lower rate than upper income families.
The trend where families with a similar income clustered together in neighborhoods had a low impact in the overall increase in income disparity in these neighborhoods.
The rate of unemployment in lower and upper income neighbourhoods did not play a significant role in income inequality between low-income and prosperous neighbourhoods. The types of jobs held by family members contributed to the amount of family income in the neighborhoods under study. People in lower income neighborhoods held jobs that paid significantly less than what workers in more prosperous neighborhoods were making.
- Over the 25-year data-collection period, neighborhood inequality for family earnings rose significantly, particularly in Calgary (which saw its Gini coefficient increase by 81% between 1980 and 2005, Toronto (49%), Winnipeg (45%) and Edmonton (43%). Vancouver, Montreal, Quebec City, and Ottawa-Gatineau region experienced smaller, but still significant, increases in income disparity, which ranged from 36% in Vancouver to 10% in Ottawa-Gatineau region.
Income inequality between neighborhoods shows that while cities as a whole may enjoy a general improvement in economic conditions, not all neighborhoods share the wealth equally.
With regard to the impact this phenomenon has, income inequality between neighborhoods can affect its residents in various ways. For example, more crime may be committed in low-income areas, exposing residents in these areas to more criminal activity than if they were living in areas with greater prosperity. There is also evidence that individuals residing in low-income areas receive inferior health care, and attain lower levels of education compared to their counterparts in high-income neighbourhoods. There is evidence also indicating that low-income individuals who reside in comparably higher income areas usually have better overall health.
This report includes some interesting information about how the smaller contributing factors, such as urban economic segregation, the tendency of like to live with like, has been addressed in the past. City planners frequently endeavor to create heterogeneity in neighborhoods, so that all residents of cities may theoretically benefit from a general increase in economic improvement. Since the findings of this study suggest that segregation plays a minor role compared to the jobs held and the incomes of rich and poor residents, perhaps this phenomenon is a question for social planners. For example, how can we provide additional training for low-income earners to obtain higher paying jobs?
This study provides an interesting piece of information to an overall sparse body of evidence about the causes of income disparity among Canadians. As more evidence is collected, it will be interesting to formulate more strategies to address this important issue.
This study includes a lot of relevant information for urban planners, social policy makers, healthcare policy makers and health care providers, educators, and social workers.
Reviewed by Christine Donnelly