Microeconomics,, 16th Canadian Edition

(Sean Pound) #1

Figure 14-12 Share of Total Income Received By the Top 1% of
Earners, 1920–2012


Changing Income Shares


Figure 14-12 shows the share of total pre-tax income accruing to the top
1 percent of Canadian income earners since 1920. Between 1920 and
1940, their share varied between about 14 and 18 percent of total income.
The share then declined sharply to 10 percent by the end of the Second
World War in 1945, and for the next four decades the share fell further,
though gradually, to a low of about 8 percent. The period from 1945 to
the mid-1980s was one of substantial growth in the size and income of
Canada’s “middle classes” and an associated decline in the share of
income going to society’s richest. In terms of income distribution, this
period is often referred to as the Great Compression because incomes were
becoming more equally distributed relative to the early decades of the
century. Since the mid-1980s, however, the share of income accruing to
the highest 1 percent of earners has been rising. From a low of about 8
percent, the share increased to a peak of about 14 percent in 2007; it then
declined to about 12 percent where it is today.


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