Textbook Notes (363,559)
Canada (158,426)
Sociology (1,053)
SOCA01H3 (480)


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University of Toronto Scarborough
Malcolm Mac Kinnon

Chapter 8: Economic Inequality in Canada -regarding the sale of body parts people selling body parts are almost invariably poor and people buying body parts are invariably rich -North America (especially US) poor people are more likely than rich to suffer illnesses that could be alleviated by organ transplantation and yet are less likely to be offered transplant opportunities In the US, this is largely the result of the poor not having adequate private health insurance to cover transplantation costs -Materialism, the attempt to satisfy needs by buying products or experiences, is a defining characteristic of modern society economic prosperity has made Canada one of the best countries to live in -Figure 8.1 shows growth of prosperity in post-WW2 Canadian economy (Note: incomes in graph corrected for inflation) Todays average income $70000 versus $30000 in the early 1950s -purchasing power of families rose b/c economic productivity was enhanced by improvements in workers skills and by advances in the technologies used for production -Notice from Figure 1 that average earnings have increases at a slower rate recently event though the number of earners in a family increased more women entered the paid labour force Despite working harder and longer, families incomes have not grown proportionately -Figure 8.1 simplification b/c it is based on averages -economic prosperity and benefits of materialism are not equally shared -two extremes (rich and poor) most of use inb/w the two extremes -best way to measure inequality that falls b/w these two extremes organize into quintiles -the concept of the share of income held by each quintile is frequently used to investigate income inequality in Canada and elsewhere -Figure 8.2 shows that for 2002, lowest quintile (20%) of income earners received 4.6% of all income while the top quintile received 45% of all income almost half of all income was held by 20% of individuals and families -Income inequality is somewhat less marking in Canada than in the US -Figure 8.2 also shows that since the mid-1980s, there has been growing evidence of widening income inequality in Western industrial countries, including Canada -incomes in Figure 8.2 pre-tax incomes: the money ppl receive before paying taxes -Table 8.1 illustrates that in 2002, the govt did redirect some income from the highest earners in Canada (the top quintile) to each of the other quintiles -furthermore, during the last decades, redistributive effort of governments declined in Canada Explanations of Income Inequality Page 1 -much about income inequality traces back to what kinds of work (career, job) a person is able to obtain (see Table 8.2) -Although talent and effort matter, rewards follow only when these are refined into particular skills who gets to develop which skills depends on access to learning environments -when individuals begin to participate in formal education, what they encounter varies in compatibility with earlier experience, mostly gained with family members -success at formal schooling is the key to acquiring economically valued skills natural talent and effort are important ingredients in this process, to be sure, but education matters a lot -importance of education as a determinant of occupation and income continues to increases -although education opportunities have expanded enormously, in nearly all developed economies, including Canada, the chances of advancing in educational systems has consistently remained higher for people born into families that are relatively more education -Individuals must supply talent and effort to accumulate human capital (useful knowledge and skills) but rates of success also depend on the human capital their families accumulated in the previous generation Human Capital Theory (HCT) -HCT stresses the increasing centrality of education as a factor affecting economic success human capital is investment in education and training -knowledge intensive jobs are increasingly numerous in Canada and better educated workers are more skilled and productive in these jobs b/c they have made investments in acquiring the research skills and knowledge base essential to the new economy -much evidence supports a HC interpretation of the link b/w schooling and incomes but this is not a complete explanation for why ppl earn what they earn -part of the reason why ppl with the same amount of human capital may receive different economic rewards is that they possess different amounts of social capital Social capital refers to peoples networks or connections knowing the right people and having strong links to them helps in attaining opportunities -A related version of this argument is captured in the notion of cultural capital -cultural capital emphasizes a set of social skills people have, their ability to impress others, to use language and images effectively and to influence and persuade people -social capital stresses your networks and connections with others but cultural capital emphasizes you impressions managements skills and your ability to influence others -both concepts emphasize that families higher in the social hierarchy enjoy more capital of all types Summary: natural talent and effort are important, level of education is a critical factor in finding continuous, well-paying employment and in addition, social or cultural capital is consequential for many in finding economic success see Figure 8.3 Income Vs. Wealth Page 2 -Table 8.3 suggests a mix of opportunism, business acumen, and a family fortune as key determinants of wealth -also illustrates the increasingly diverse ethnic origins of elite families in Canada -only a few families acquire the great wealth of major business enterprises, but all families own assets and these add up to greater or lesser family wealth -Figure 8.4 shows the percentage of Canadian families that had accumulated wealth in 1999 two patterns stand out 1) for most families, wealth accumulation is fairly modest and 2) the relative few who manage to accumulate a lot do so relatively late in life -Unfortunately, social scientists have neglected the study of wealth, partly b/c reliable data on the subject are hard to find -US has surpassed all other highly industrialized societies in wealth inequality -Table 8.4 1999, wealthiest 1/5 of families owned 73.1% of the wealth while poorest had -0.6% of the wealth -also wealth inequality in Canada increases sharply from 1984-1999 and the net shift of wealth was away from the bottom 90% in favour of the wealthiest 1-% -Wealth inequality is also significant b/c only a modest correlation exists b/w income and wealth income distribution has little effect on the distribution of wealth Income and Poverty -at the other extreme of the income distribution are the homeless -in recent decade
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