Income Inequality Canada: Tiff Macklem, Bank Of Canada Deputy, Says Globalization, Tech To Blame

Tiff Macklem Inequality Globalization Bank Canada

First Posted: 03/12/2012 3:46 pm Updated: 03/12/2012 3:46 pm

OTTAWA -- The Bank of Canada's second in command says globalization, along with technological change, has been a major driver of rising inequality within countries.

The banks' senior deputy governor Tiff Macklem says the market forces unleashed by globalization has decreased global inequality, but ironically increased it within countries.

He says the phenomenon is not temporary and that governments need to address the issue.

Central bankers can mitigate against income disparity by keeping inflation low and stable and protecting the financial system.

More on income inequality at Mind The Gap:

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Macklem told a business audience in Brazil that increases in inflation hurt the poor more than the rich.

And he says the bank's own study shows that new rules to reduce risks in the banking sector will be a net benefit to economies in Canada and around the world.

COUNTRIES WITH THE WIDEST GAP BETWEEN RICH AND POOR
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  • 10. New Zealand

    > Gini coefficient: 0.330<br> > Change in income inequality: +21.8%<br> > Employment rate: 72.3% (6th highest)<br> > Change in income of the rich: +2.5% per year<br> > Change in income of the poor: +1.1% per year New Zealand performs well by a number of economic indicators, including employment, where it ranks sixth highest out of the 27 OECD countries in the study. Income in New Zealand has increased across the board since the 1980s, but the percentage annual increase among the top decile was more than twice as great as among the bottom decile. Among OECD nations, capital income in New Zealand as a percentage of total household income grew the most for the richest group and decreased substantially for the poorest group.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 9. Australia

    > Gini coefficient: 0.336<br> > Change in income inequality: +8.7%<br> > Employment rate: 72.4% (5th highest)<br> > Change in income of the rich: +4.5% per year<br> > Change in income of the poor: +3% per year The difference in the annual increase in income between the richest and the poorest in Australia from the mid-1980s to 2008 is one of the largest among all countries in the study. The average annual change in income for the bottom decile was 3%, compared with the top decile's 4.5%. This caused the Gini coefficient to increase 8.7% over those years. Australia has one of the highest minimum wages, as a percentage of average wages, of all the G-20 countries. The country also has a fairly high employment rate.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 8. Italy

    > Gini coefficient: 0.337<br> > Change in income inequality: +9.0%<br> > Employment rate: 56.9% (3rd lowest)<br> > Change in income of the rich: +1.1% per year<br> > Change in income of the poor: +0.2% per year In Italy, income inequality increased 9% between 1985 and 2008. According to the OECD, earnings for the wealthiest 10% increased an average of 1.1% each year, while earnings for the poorest 10% grew just 0.2% annually. Italy has the third-lowest employment rate among the 27 nations in the study, with just 56.9% of working-age adults holding jobs in 2008. Since 1985, unemployment benefits declined by more than 50% to one of the lowest recipient rates in the OECD.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 7. United Kingdom

    > Gini coefficient: 0.345<br> > Change in income inequality: +7.9%<br> > Employment rate: 70.3% (10th highest)<br> > Change in income of the rich: +2.5% per year<br> > Change in income of the poor: +0.9% per year The UK had one of the biggest increases in the income gap between the wealthy and the poor over the past two and a half decades. On average, the income of the bottom 10% increased 0.9%, while income for the top 10% grew 2.5% per year. After Israel and Australia, the UK had the third-largest difference between the top decile's annual income increase and the bottom decile's increase. The income ratio of the wealthiest citizens to the poorest citizens is 10 to one.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 6. Portugal

    > Gini coefficient: 0.353<br> > Change in income inequality: n/a<br> > Employment rate: 65.6% (14th highest)<br> > Change in income of the rich: +1.1% per year<br> > Change in income of the poor: +3.6% per year Despite its high Gini coefficient, Portugal's income inequality has been improving. From the mid-1980s to the late 2000s, the incomes of the country's poorest increased an average 3.6% each year. The incomes of the richest grew only 1.1% annually. The country has increased its efforts to redistribute income since the mid-1980s, such as through benefits for the unemployed.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 5. Israel

    > Gini coefficient: 0.371<br> > Change in income inequality: +13.8%<br> > Employment rate: 60.2% (7th lowest)<br> > Change in income of the rich: +2.4% per year<br> > Change in income of the poor: -1.1% per year In Israel, the average income of the bottom 10% actually decreased between 1985 and 2008. On average, income of the top 10% increased 2.4% per year. During the same period, income of the poorest 10% declined 1.1% each year -- the worst rate of decline among the 27 nations studied. Only one other country, Japan, saw its bottom decile's income fall as well. According to the OECD, the top 10% of Israel's residents make 14 times more than the poorest 10%.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 4. United States

    > Gini coefficient: 0.378<br> > Change in income inequality: +12.1%<br> > Employment rate: 66.7% (13th highest)<br> > Change in income of the rich: +1.9% per year<br> > Change in income of the poor: +0.5% per year Inequality in the United States increased significantly from 1985 to 2008, putting it in the fourth-worst spot in the study. As with many other countries in which income inequality has increased, average income has gone up across all income groups since the mid-1980s, but not equally. The income of the wealthiest 10% has greatly outpaced the poorest 10%. The share enjoyed by the top 0.1% in total pretax income quadrupled in the 30 years to 2008.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 3. Turkey

    > Gini coefficient: 0.409<br> > Change in income inequality: -5.8%<br> > Employment rate: 46.3% (the lowest)<br> > Change in income of the rich: +0.1% per year<br> > Change in income of the poor: +0.8% per year Turkey was one of the few OECD countries to experience a narrowing of the gap between rich and poor, with income inequality improving 5.8% between 1985 and 2008. However, it still has the third-highest income inequality among the countries in this study. Part of Turkey's problem is a relatively low number of government programs to aid the poorest citizens. The average government social expenditure among OECD nations is close to 20% of GDP, while it spends just above 10% -- the third-lowest percentage. The wealthiest 10% of Turkey's residents make 14 times more, on average, than the poorest 10%.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 2. Mexico

    > Gini coefficient: 0.476<br> > Change in income inequality: +5.1%<br> > Employment rate: 60.4% (8th lowest)<br> > Change in income of the rich: +1.7% per year<br> > Change in income of the poor: +0.8% per year Mexico has one of the highest rates of income inequality. Among all OECD countries, Mexico has the lowest amount of public social expenditure as a percentage of GDP. It also has the lowest unemployment benefit recipient rates. Finally, the country has the lowest minimum wages as a percentage of average wages.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

  • 1. Chile

    > Gini coefficient: 0.494<br> > Change in income inequality: n/a<br> > Employment rate: 59.3% (4th lowest)<br> > Change in income of the rich: +1.2% per year<br> > Change in income of the poor: +2.4% per year Chile is one of the few countries where the income of the poor increased at a higher annual rate than the income of the wealthy, 2.4% to 1.2%. Nevertheless, the South American nation has the worst income inequality among the 27 OECD nations examined. Chile has a particularly high rate of self-employed individuals, primarily because of its large farming class. The income ratio of the top 10% to the bottom 10% is 27 to one.<br> <a href="http://247wallst.com/2011/12/06/countries-with-biggest-spread-between-rich-and-poor/3/" target="_hplink">Read the entire post at 24/7 Wall St. </a>

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