Growing Unequal? Changes in the Distribution of Earnings across Canadian Cities

Abstract

This paper investigates changes in the distribution of earnings across 87 metropolitan areas in Canada. It does so using micro data taken from the 20 per cent long-form sample of the census for the years 1996, 2001 and 2006. Results point to overall increases in urban inequality and to greater heterogeneity in inequality across the urban hierarchy, with larger cities growing particularly unequal over time. Cross-sectional and panel regression models suggest that city size, unemployment, deindustrialisation and the percentage of a city’s population composed of visible minorities contribute to increased inequality. In contrast, a city’s level of economic development has a mitigating effect on inequality, although this effect appears to fade away over time. The effects of changes in a city’s age, education and gender profiles on inequality are mixed.