EnviroSocial Canada

Social conditions: Inequality

How unequal are incomes, and what do taxes and transfers change?

Canada’s after-tax Gini coefficient was 0.305 in 2024. It fell to 0.281 in 2020 as pandemic benefits reached low-income households, then returned to its earlier level. Taxes and transfers matter most for seniors and lone parents; working-age adults living alone get very little.

Gini, after tax, 2024
0.305
0.314 in 2015
Pandemic low
0.281
2020, down from 0.299 in 2019
Unattached seniors: transfers
$23,500
vs $18,500 market income
Unattached non-seniors: transfers
$1,200
vs $43,900 market income

Inequality over a decade

Income inequality: Gini coefficient of after-tax income, 2015–2024

0 means everyone has the same income; 1 means one person has it all. The axis starts at 0.25 to make year-to-year changes visible.

Source: Statistics Canada table 11-10-0134-01, via the Canadian Indicator Framework for the SDGs (indicator 10.1.1)Hover or focus the chart for values

Who relies on transfers

Market income is what people earn from work and investments. Transfers include pensions, child benefits, employment insurance and social assistance.

Market income, transfers and after-tax income by family type, 2024

Medians in 2024 dollars. Compare the blue (earned) bar with the orange (government transfers) bar for each family type.

  • Market income
  • Government transfers
  • After-tax income

Each concept’s median is calculated separately, so the three bars don’t add up exactly.

Source: Statistics Canada, The Daily — Canadian Income Survey, 2024, Table 1 (from table 11-10-0190-01)Hover or focus the chart for values

Income across the country

Median after-tax income by province and territory, 2024

2024 constant dollars, families and unattached individuals. Canada: $75,500.

Source: Statistics Canada, The Daily — Canadian Income Survey, 2024, Table 2 (from table 11-10-0190-01)Hover or focus the chart for values

Exercises

  1. For which family type do government transfers exceed market income? What explains it?

    Warm-up, Reading charts

    Check your reasoning

    Unattached seniors ($23,500 in transfers vs $18,500 market income). Most are retired, so pensions (OAS, GIS, CPP/QPP) replace earnings.

  2. Why did the Gini coefficient fall in 2020 even though many people lost jobs?

    Core, Redistribution

    Check your reasoning

    Market incomes fell, especially at the bottom, but temporary benefits (CERB and top-ups to existing programs) replaced more than the lost earnings for many low-income workers. After-tax income at the bottom rose relative to the middle, so after-tax inequality fell.

  3. Two countries have the same Gini. Can their income distributions still be very different? Sketch two Lorenz curves to show it.

    Core, Measurement

    Check your reasoning

    Yes. Lorenz curves can cross: one country may have a poorer bottom but a more equal top, the other the reverse, and the areas can still be equal. That is why analysts also look at income shares by decile or the ratio of the 90th to 10th percentile.

  4. Working-age adults living alone receive a median of $1,200 in transfers and have a 33% poverty rate. Propose and cost a targeted benefit for this group, and discuss its effect on work incentives.

    Stretch, Policy analysis

    Check your reasoning

    Options include expanding the Canada Workers Benefit or a basic income for single adults. A good answer estimates the number of people (about 1.6 million single adults below the line), sets a benefit level, and discusses phase-out rates: a steep clawback creates high effective marginal tax rates that can discourage extra work.