August 14, 2023

Weekly EconMinute—Income inequality in Canada’s largest cities

In this week’s EconMinute, we’re talking about income inequality in Canada’s largest cities.  

Income inequality is an important measure to track not only affordability and economic opportunity, but also social harmony.  

In Canada we have grown accustomed to measuring inequality at the national and provincial levels, but rarely do we see the breakdown where cost of living pressures are highest—in our country’s biggest cities. We decided to compare how Alberta’s two largest cities stack up against Canada’s top 10 most populous cities.  

To measure income inequality, we use the Gini coefficient, a metric that ranges between zero and one. A coefficient of 0 means everybody has the exact same income. A coefficient of 1 means that a single individual earns all the income. 

But when we look at income distribution, we can’t forget about income levels. Incomes within a given location could be perfectly distributed (with a Gini coefficient of zero), but those people could be earning nothing, or they could all earn $100k/year—in both cases, there’s perfect equality.  

Thanks to Statistics Canada data released last week, we can compare city-level income distributions alongside median income levels in 2021. When focusing on Canada’s 10 largest census metropolitan areas, we found the following: 

  • Toronto had Canada’s highest disparity between low- and high-income households (Gini coefficient = 0.407), but the median after-tax family income was the third lowest ($59,070). 
  • Calgary (0.386) and Vancouver (0.385) had similar levels of income inequality, but Calgary’s median family income ($69,610) was $8,320 higher than Vancouver’s ($61,290). 
  • In fact, Calgary had the second highest median after-tax income of any city in Canada, behind only Ottawa-Gatineau ($70,840). 
  • While Edmonton, Ottawa-Gatineau, Hamilton, Kitchener-Cambridge-Waterloo, Winnipeg, and Montreal all shared similar levels of income inequality, Ottawa and Edmonton were in the top 3 highest median family incomes, and Montreal and Winnipeg were the two lowest. 
  • Toronto and Quebec City shared similar median after-tax family incomes ($59,070 and $59,550), but Quebec City had the least income inequality of Canada’s largest cities (0.293) whereas Toronto had the highest (0.407). 

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