Textbook Notes (363,007)
Canada (158,140)
Sociology (1,053)
SOCA02H3 (310)
Chapter 8

Chapter 8

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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) Today’s 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 gov’t 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 people’s 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 decades the number of ppl with “no fixed address” has increased considerably • -homelessness is one manifestation of poverty • -poverty lacks an agreed definition should poverty be defined in absolute or relative terms? • -an absolute definition of poverty focuses on bare essentials (food, shelter, clothing, etc) • -what constitutes bare essentials depends on social context (e.g. heating is essential here but not in Ethiopia) • -Should poverty be defined on the basis of income or on the basis of consumption? • -Definition of poverty matters b/c social policies are enacted (or not enacted) based on levels and trends in poverty • • -Social policy has a profound impact on the distribution of opportunities and rewards in Canada • -politics can reshape the distribution of income and the system of inequality by changing the laws governing people’s right to own property • -politicians can also alter patterns of inequality by entitling people to various welfare benefits and by redistributing income through tax policies • -A definition of poverty showing fewer poor Canadians implies little need for gov’t action • -Unlike other countries like the US, Canada does not have an official definition of poverty • -Stats Canada reports what it calls a low-income cutoff Page 3 • -this is “an income threshold below which a family will likely devote a larger share of its income to the necessities of food, shelter and clothing than an average family would” which would likely result in “strained circumstances” • -e.g. if the average family retains 56% of its after tax income after paying for necessities, then the low income cutoff is set such that less that 36% of the income is left • -the threshold is reported for seven different family sizes and five sizes of community since “strained circumstances” depend on the number of ppl in the family and the place you live See Table 8.5 • -Figure 8.5 indicates that families without any earners are at especially high risk but this occurs even though government transfers are included in family income totals • -overall rate of 8.4% is the proportion of families that live in a low income at a given time but many families move into and out of poverty most commonly as a results of unemployment or reduced work hours, including episodes of poor health Figure 8.6 • Myths about the Poor • -there are contrasting images that are sometimes constructed to portray the poor • -research continues to show that many poplar images about the poor are inaccurate • Myth 1: People are poor because they don’t want to work fact: in most families at least one family member works • Myth 2: The overwhelming majority of poor people are immigrants fact: Individuals and family heads who are immigrants and who arrived in Canada before 1980 generally experience poverty at lower rates than native-born Canadians do higher poverty rates are evident amount more recent immigrants who are less well established, but recent immigrants represent a fraction of all poor people • Myth 3: The welfare rolls are crammed with young people who ought to be earning a living • Myth 4: Most poor people are trapped in poverty fact: one in three people with a low income in 2002 had moved beyond it by 2003 poverty for many is a results of family finances that are unstable and slip in and out of difficult circumstances Explaining Poverty • -at one level, because poverty is a social construction—who is poor depends on the definition—the explanations focus on definitions • -individual-level explanations focus on the attributes of ppl who are poor, asking how these ppl differ from people who are not poor someone is poor on this logic b/c of personal attribute such as low intelligence of behaviour abnormality • -evidence suggests that individual attributes do explain a small amount of poverty but for the most part, poverty is not a consequence of individual Page 4 attributes even though these are important in some cases (such as ppl with disabilities or schizophrenia) • -a related form of explanation focuses more on attitudes of individuals and not on attributes that are inherited this type of reasoning is often dismissed by sociologists as “blaming the victim” • -people who are poor may develop “bad attitudes” but these may results from poverty and not be causes of poverty • -descriptions of poverty stressing a culture of depression, lack of hope, and fatalism may be accurate, but theses effects of poverty ought not to be confused with the causes of poverty • -many people who are poor, do work, are religious, don’t smoke and dirk and so one Thus, evidence that supports explanations founded on these personal deficits is often lacking • -another form of explanation, one with greater currency in sociology, stresses the social organization of society, or subsystems in society as explanations of poverty • -organization of our economy for example affects poverty capitalist economies feature cyclical booms and busts during a bust when unemployment rates rise, so do the number of families forced to live on reduced earnings, which for many means living in poverty • -reductions in income that results can hardly be attributed to changes in individual motivation, low wage jobs are also party of the economy and some people will not earn enough to escape poverty • -“a weak work ethic and lack of effort” are seldom the explanation for individual poverty; “much more often the problem is one of not enough good jobs” • -others stress social policy as a factor affecting poverty levels e.g. minimum wage legislation is a social policy that creates a group of working poor • -system of tax collection and tax allocation illustrates another way that social policies affect poverty • -Canada’s income tax system is progressive but the overall tax system is relatively neutral the system does little to actually redistribute income and therefore relatively little to erode poverty • -finally, other sociologists would stress ways of thinking or ideological perspec
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